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[Alpha Biz=(Chicago) Reporter Paul Lee] KB Securities lowered its target price of Samsung SDI from 800,000 won to 650,000 won on the 17th, saying that short-term earnings will be inevitable until the first half of this year due to sluggish demand for electric vehicles and IT sets. However, the investment opinion remained 'buy' considering the valuation appeal.
Samsung SDI's sales in the fourth quarter of last year fell 3% year-on-year to 5.79 trillion won and operating profit fell 22% to 381.5 billion won, falling below the consensus (average forecast for securities firms).
It is predicted that performance of medium and large-sized batteries for electric vehicles (EVs), which were expected to be good compared to business conditions, will fall short of expectations.
The average unit price (ASP) is also estimated to fall 10% QoQ due to a sharp drop in lithium prices and changes in product mix. Among them, the continued decline in lithium prices has led to a drop in the price of cathode materials and a drop in battery prices, leading to passive demand and inventory policies for front-line customers.
In addition, demand for electronic small batteries continues to weaken due to the sluggish U.S. housing market, and its position in the energy storage system (ESS) market, where the employment rate of lithium phosphate (LFP) batteries is increasing, is also weakening.
The target price was lowered because it lowered Samsung SDI's average annual growth rate (CAGR) forecast for sales of mid- to large-sized EV batteries to 15.4 percent over the next seven years from the previous 17.5 percent, considering the trend of slowing growth in the electric vehicle market. During the same period, the company's average operating profit ratio also fell from 8.0 percent to 7.6 percent.
However, KB Securities analyzed that the valuation is low even considering the poor performance.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
