[Click e-Stock] "Samsung SDI: ESS to Lead This Year's Earnings Improvement... Target Price Raised"

Target Price Raised 39% From Previous Level

On the 26th, KB Securities raised its target price for Samsung SDI from 380,000 won to 530,000 won, saying that energy storage systems (ESS) are expected to lead this year's earnings improvement trend. It maintained its investment rating of "Buy."

Lee Changmin, an analyst at KB Securities, explained, "The reason we raised the target price is that we increased the average operating margin forecast for 2026-2030 from the previous 4.1% to 6.0%, taking into account the growth trend in ESS demand driven by artificial intelligence (AI)."

KB Securities expects Samsung SDI's first-quarter results this year to be in line with the consensus (the average of securities firms' forecasts), with sales of 3.57 trillion won, up 12% year-on-year, and an operating loss of 281.6 billion won. The analyst said, "Shipments of prismatic electric vehicle (EV) batteries are expected to increase quarter-on-quarter, but earnings contraction will be inevitable due to the high base," adding, "ESS sales are estimated to be at a similar level to the previous quarter, when record-high sales were achieved. This is because strong demand is expected to keep utilization rates at the Ulsan and SPE Line 2 plants high." For small-sized batteries, the operating loss is expected to narrow quarter-on-quarter thanks to continued strong demand for battery backup units (BBU) and shipment effects of pouch batteries for the Galaxy S26. In electronic materials, the semiconductor materials business is performing well, but profitability of OLED materials is expected to weaken as it enters a seasonal off-peak period.

He still believes a conservative approach is necessary for the European and U.S. EV markets. The analyst said, "In Europe, Korean companies' market share is clearly declining regardless of the overall market growth, and in the United States, EV production and sales have plunged since the Inflation Reduction Act (IRA) incentives effectively ended last September," adding, "In the end, ESS is the only reliable pillar." Samsung SDI began mass production of NCA (nickel-cobalt-aluminum) batteries for ESS in the United States in the fourth quarter of last year. From the fourth quarter of this year, mass production of LFP (lithium iron phosphate) batteries for ESS is also expected to begin in earnest. The analyst predicted, "ESS will drive Samsung SDI's earnings improvement this year."