Samsung SDI Earnings: Revenue In Line but Margin Missed Despite Resilient EV Battery Growth

Samsung SDI’s sales for the September quarter were in line with Refinitiv consensus but operating profit missed by about 7%. Strong sales in medium and large electric vehicle, or EV, batteries and recovery of the electronic materials segment lifted top-line growth by 11% year over year and offset sluggish cylindrical battery and energy storage battery sales. We lower our 2023-27 revenue estimates by 2%-8% due to a reduced outlook for energy storage and power tool battery demand. To factor in a prolonged margin weakness in small-size battery sales and semiconductor materials, we reduce our 2023-27 operating income forecast by 3%-11%. We reduce our fair value estimate to KRW 700,500 from KRW 802,000, which corresponds to 23 times P/E and 9 times EV/EBITDA on a 2024 basis.