Wednesday, April 8, 2020
Samsung SDI (006400 KS): Korea's Hope for Growth
EV Battery Business Expected to Turn around in 2020
Samsung SDI (006400 KS): Korea's Hope for Growth
  • By Soh Hyun-cheol & Park Hyung-wou
  • February 12, 2020, 17:31
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The authors are stock analysts at Shinhan Investment Corp. They can be contacted at and, respectively. -- Ed.


Tesla’s electric vehicle (EV) output increased 43.8% YoY to 368,000 units in 2019 from 256,000 in 2018. With a new Gigafactory in Shanghai going into production in December last year, the U.S. automaker’s sales are expected to exceed 1mn units in 2022. Tesla has seen its share price soar 122.7% since December 1, 2019. Its market cap stands at USD132.4bn as of February 5, far surpassing General Motors’ USD50.1bn.

EV battery business to turn around in 2020

Samsung SDI’s EV battery sales jumped 76.7% YoY to KRW2.45tr in 2019. Germany is pressing ahead with the switch from diesel power to electric by 2030. The government plans large-scale restructuring of the diesel car workforce and increase the number of charging stations for EVs from current 20,000 to 1mn. In 2020, we expect Samsung SDI’s EV battery business to swing to a profit of KRW113bn with sales up 66.5% YoY to KRW4.07tr. It should drive the company’s growth given that EV demand is projected to increase 5.8 times from 2.3mn units in 2019 to 13.3mn in 2025.

Retain BUY and raise target price by 29% to KRW400,000

We raise our target price for Samsung SDI by 29% to KRW400,000 in view of: 1) forecasts for a turnaround in EV battery earnings in 2020; 2) Samsung Display’s expansion into QD OLED TV panels; and 3) 2020F operating profit margin of 15.3% from electronic materials. The development of NCA (nickel cobalt aluminum) cathode materials with a nickel content of 80% or more should notably improve energy density and costs. The company is also working on a battery that offers more than 600 kilometers of driving on a single charge, which is expected to further strengthen its product competitiveness. The electronic materials business should continue on the growth track with Samsung Display’s expansion into QD OLED TV panels. Tesla is leading the creative destruction of the auto industry. Going forward, Samsung Electronics’ foldable OLED smartphones will likely become the mainstream. Aggressive buying by foreign investors may cause the share price to overshoot. Samsung SDI ranks ninth on the KOSPI by market cap and is expected to drive much-needed growth for the Korean economy.