DB Financial Investment and LS Securities issued sharply divergent views on Samsung SDI Korean Stocks, with target prices of 840,000 won versus 419,000 won. DB Financial Investment maintained a 'buy' rating and forecast Q2 revenue of 3.8 trillion won (up 19% year-over-year) and operating profit of 13.8 billion won, citing energy storage system (ESS) tariff refunds and Advanced Manufacturing Production Credit (AMPC) of 82.4 billion won as turnaround catalysts. LS Securities lowered its target to 419,000 won and maintained a 'hold' rating, pointing to Samsung SDI's May battery installations of 1.6GWh (down 35% year-over-year) and market share decline to 1.4% in May. The contrasting outlooks reflect disagreement over whether ESS segment improvements can offset sustained electric vehicle (EV) battery market share erosion amid intensifying competition in prismatic battery markets.
DB Financial Investment Forecasts Q2 Breakeven on ESS Tariff Refunds
DB Financial Investment projected Samsung SDI's Q2 consolidated revenue at 3.8 trillion won, up 19% year-over-year, with operating profit of 13.8 billion won reaching breakeven (BEP) level. The brokerage attributed the turnaround to AMPC tax credits of 82.4 billion won and ESS business tariff refunds. Researcher Ahn Hoe-soo stated that the ESS division, previously profitable, recorded losses exceeding 110 billion won in the second half of last year due to tariff burdens from producing in Asian factories and selling primarily to the United States. Ahn noted that even assuming partial tariff refunds, the impact would be significant and margin surprises are expected. The firm maintained its 840,000 won target price and 'buy' rating, calling the recent stock price adjustment a buying opportunity.
Samsung SDI European Factory Capacity Utilization Defended in Second Half
DB Financial Investment assessed that Samsung SDI's EV division capacity utilization defense is proceeding smoothly in the second half. Researcher Ahn projected that new projects for Hyundai Motor and Kia at the European factory will serve as key drivers for capacity utilization increases. Ahn forecast that even if shipments to core customer BMW partially decline, the company can maintain capacity utilization in the 70% range in the second half. In the small battery segment, the company's position as a high-power battery leader continues to benefit from favorable conditions in data center backup battery units (BBU) and other downstream industries, steadily reducing losses. Ahn concluded that the company's earnings improvement scenario is progressing without variables.
LS Securities Lowers Target on EV Battery Market Share Decline
LS Securities lowered its target price to 419,000 won and maintained a 'hold' rating, citing sustained negative growth in EV batteries, which account for over half of total revenue. According to LS Securities, Samsung SDI's May installations in the global EV battery market plunged 35% year-over-year to 1.6GWh. Market share continued its downward trend, falling to 1.4% as of May. Researcher Jung Kyung-hee noted that market share is declining due to price competition in the prismatic battery market, and the company has been hurt by customer portfolio concentration of over 80% in Volkswagen Group and BMW Group, as these customers diversify battery types and increase their proportion of China's CATL. Jung warned that considering the battery industry's high capital expenditures (CAPEX) and depreciation costs, declining capacity utilization raises red flags for profitability.
Cylindrical Battery Segment Faces Rivian Supply Suspension
The cylindrical battery division, expected to drive growth, continues to face sluggish sales after Rivian requested a temporary supply suspension citing inventory accumulation. LS Securities maintained a cautious stance even on the ESS segment, where market opportunities are opening in the United States due to Foreign Entity of Concern (FEOC) regulations under the Inflation Reduction Act (IRA) and increased tariffs on Chinese batteries. The brokerage pointed out that while Q1 global ESS shipments grew 78% year-over-year, Samsung SDI grew only 36%, causing market share to shrink from 2% to 1.5%. Researcher Jung projected that considering high Chinese inventory accumulated ahead of safe harbor application and FEOC bypass strategies such as local production and joint venture equity adjustments, Chinese products will exceed 60% market share in the US ESS market. Jung concluded that ESS growth is insufficient to offset EV weakness.
Samsung Display Stake Sale Possibility Cited as Financial Positive
LS Securities noted that from a financial perspective, asset liquidation potential could act positively. The brokerage mentioned the possibility of Samsung SDI selling its stake in Samsung Display ahead of Samsung Electronics' special dividend.
FAQ
Why do DB Financial Investment and LS Securities have such different target prices for Samsung SDI Korean Stocks?
DB Financial Investment set a target of 840,000 won based on Q2 breakeven expectations driven by ESS tariff refunds of over 110 billion won and AMPC tax credits of 82.4 billion won, while LS Securities lowered its target to 419,000 won citing Samsung SDI's May EV battery installations decline of 35% year-over-year and market share drop to 1.4%, with customer concentration risks in Volkswagen and BMW groups.
What is the expected impact of ESS tariff refunds on Samsung SDI's Q2 results?
DB Financial Investment forecast Q2 operating profit of 13.8 billion won reaching breakeven level, attributing the turnaround to ESS tariff refunds that address losses exceeding 110 billion won in the second half of last year caused by tariff burdens from Asian production and US sales, with the firm stating that even partial refunds would be significant and create margin surprises.
How has Samsung SDI's global battery market share changed in recent months?
Samsung SDI's May EV battery installations fell 35% year-over-year to 1.6GWh with market share declining to 1.4%, while in the ESS segment Q1 shipments grew only 36% compared to 78% global market growth, causing market share to contract from 2% to 1.5% as customers like Volkswagen and BMW increased their proportion of China's CATL and diversified battery types.
