“Samsung SDI, Korea’s only prismatic battery manufacturer… Volkswagen is expected to benefit” [신한금융투자]

On the 19th, Shinhan Investment Corp. expected to benefit from the adoption of Volkswagen’s prismatic battery for Samsung SDI. We maintained our BUY rating and target price of W900,000.

Shinhan Investment Corp. forecasts Samsung SDI’s 2021 operating profit at 1.72 trillion won. This is 59.7% higher than the same period last year.

So Hyun-cheol, a researcher at Shinhan Financial Investment, said, “Volkswagen will install prismatic batteries in electric vehicles from 2023, and that 80% of electric vehicles will be equipped with prismatic batteries by 2030. It is positive as it has a competitive advantage in terms of performance and cost as it is being produced.”

According to SNE Research, square, pouch, and cylindrical batteries accounted for 49%, 28%, and 23%, respectively, in electric vehicle batteries in 2020. Samsung SDI is the only Korean company to produce prismatic batteries. Researcher So said, “It is expected to be an opportunity factor for Samsung SDI,” and said, “The key to securing profitability is to respond effectively to pressures to cut prices.”

Researcher So pointed out that Volkswagen’s large-scale investment in its own batteries was a negative factor. Researcher So said, “Volkswagen plans to invest in its own battery line of 240GWh in collaboration with North Volt, Sweden by 2030. This is about 4 million units based on 60KWh per electric vehicle. If it goes according to plan, it is a tremendous amount of 40% of the total production of 10 million Volkswagen passenger cars.”

However, he believes that it is not an easy task to develop a battery itself, so it requires a cold judgment rather than fear. Researcher So said, “In the past, Bosch, Germany, which established Samsung SDI and Battery JV, has promoted its own battery production, but gave up its battery business due to technical issues.” Added.