Brokerage : SK Securities
Analyst : Hyung-wou Park
Investment Rating : BUY (Maintained)
Target Price : KRW 450,000 (Raised)
Core Momentum : Confirming an earnings bottom supported by 4Q25 client compensation and favorable base effects, seeking early utilization recovery via capacity rationalization alongside downside support from an attractive P/B (1.0x) and solid financial health.
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY (Maintained), Target Price KRW 450,000 (Raised by applying a conventional IT hardware P/E multiple of 10x to 2032F EPS)
- Market Data (As of 2026-02-02): Current Price KRW 356,000 (Upside Potential 26.4%), Market Cap KRW 28.69 Trillion, KOSPI 4,949.67pt, Shares Outstanding 80.59 Million, Foreign Ownership 23.66%
- 4Q25 Consolidated Financial Results:
- Revenue: KRW 3.86 Trillion (+7.0% vs. SK estimate KRW 3.61 Trillion, +10.2% vs. consensus KRW 3.50 Trillion)
- Operating Profit: KRW -299.0 Billion (Loss widened vs. SK estimate KRW -237.0 Billion, -0.7% vs. consensus KRW -301.0 Billion)
- Net Profit (Controlling): KRW -75.0 Billion (Loss widened vs. SK estimate KRW -42.0 Billion, loss narrowed vs. consensus KRW -225.0 Billion)
- Operating Margin / Controlling Net Margin: -7.7% / -1.9%
- Full-Year 2026 Financial Forecasts (New Revisions):
- Revenue: KRW 14.78 Trillion (-5.9% vs. prior estimate KRW 15.69 Trillion, -1.1% vs. consensus KRW 14.94 Trillion)
- Operating Profit: KRW -837.0 Billion (Operating loss widened vs. prior estimate KRW -551.0 Billion and consensus KRW -340.0 Billion)
- Net Profit (Controlling): KRW -106.0 Billion (Controlling net loss widened vs. prior estimate KRW -46.0 Billion and consensus KRW -2.0 Billion)
- Operating Margin / Controlling Net Margin: -5.7% / -0.7%
🚀 2. [Market Opportunities & Business Outlook]
- 4Q25 Earnings Review (Losses Continued Despite Compensation): Operating Loss stood at KRW -299.2 Billion (Loss widened YoY, narrowed QoQ, including KRW 79.8 Billion AMPC). Losses narrowed QoQ from KRW -591.3 Billion, supported by multi-hundred-billion KRW client compensation and a +30% QoQ surge in ESS sales. North American EV demand remained soft following EV purchase subsidy repeals, while ESS achieved breakeven OPM (including AMPC) due to one-off warranty expenses on legacy models.
- 1Q26 Earnings Outlook (Consolidating the Bottom): Projected Operating Loss of KRW -303.4 Billion (Loss widening slightly QoQ). Automotive EV revenue is forecast to drop ~20% QoQ with wider losses due to the expiration of client compensation, whereas ESS OPM is projected to improve from 1% in 4Q25 to 6% in 1Q26 on cost normalization, alongside rebounds in power tool and BBU small cells.
- Core Investment Highlights & Operational Strategy:
- Prominent Base Effects: Expected to demonstrate one of the sharpest YoY base-effect recoveries among battery cell peers following extreme 2025 earnings softness.
- Conservative Capacity Management: Actively downsizing and converting lines in key regions (moderating global capacity expansion from 120GWh in 2025 to 130GWh in 2026) to achieve an early utilization rebound.
- Valuation Support: Low P/B valuation relative to sector peers (1.0x) and robust financial health (debt dependency ratio of 26%) provide strong fundamental downside support.
📝 Editor’s Comment (Perspective)
The analyst views Samsung SDI as a battery manufacturer navigating persistent downstream EV headwinds (such as North American subsidy phase-outs and heightened OEM competition) by leveraging sharp base effects from 2025 lows and executing conservative capacity management to drive an early factory utilization recovery. This perspective places primary importance on disciplined capacity pacing (global capacity expanding modestly from 120GWh in 2025 to 130GWh in 2026), peer-low valuation multiples (1.0x P/B), and balance-sheet resilience (debt dependency ratio of 26%), rather than transient quarterly loss widening caused by expired 1Q client compensation.
To assess the continuing validity of this investment thesis, key monitoring factors include bottoming signals in EV battery shipment volumes throughout 2026, the normalization of ESS operating profitability toward the 6% target in 1Q26, and tangible plant utilization rebounds resulting from active capacity rationalization and line conversions. These operational developments can be tracked through upcoming quarterly financial releases, official company IR presentations, and statutory regulatory filings.
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Source: This content has been structured and newly written based on officially disclosed financial facts and data from brokerage reports.
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