Samsung SDI's headquarters in Yongin, Gyeonggi Province / Courtesy of Samsung SDI

Battery business absent from group's 450-trillion-won investment plan

By Park Jae-hyuk

A proxy war erupted between local and foreign securities firms, Tuesday, over their outlooks for Samsung SDI's stock price, which closed at 575,000 won ($465) during that day's trading session.

After Citigroup analyst Peter Lee downgraded Samsung SDI to "sell" from "buy" and lowered his price target to 480,000 won from 930,000 won, multiple domestic brokerages issued refuting reports to defend the electric vehicle battery manufacturer.

DB Financial Investment analyst Kwon Sung-ryul released his own report, titled, "Instead of looking at what you want to see, just look at what you see," in which he said that "nothing was new" in Citigroup's report.

"While the stock index rose 1.2 percent and other large IT firms' stock prices moved up around 2 percent to 3 percent during the previous session, Samsung SDI's stock price dropped 1.5 percent," Kwon said. "A negative report from a foreign company and the news that CATL will supply cylindrical battery cells to BMW seem to have affected its stock price."

He added that some things mentioned in Citigroup's report, such as Samsung SDI's conservative stance on expansion, its falling market share, intensifying competition in the prismatic battery market and independent production of batteries by carmakers, have already been known to the public.

Hi Investment & Securities analyst Chung Won-suk and Meritz Securities analyst Kim Sun-woo also remained optimistic about Samsung SDI in their reports published Tuesday. The Korean analysts expected the battery maker to continue enjoying solid growth in its earnings during the second quarter of this year, in contrast to Citigroup's gloomy outlook.

This is not the first time for an American investment bank to publish a negative report on Samsung SDI.

Exactly a year earlier, Morgan Stanley analyst Shawn Kim downgraded Samsung SDI from "equalweight" to "underweight" and lowered his price target to 550,000 won from 570,000 won, citing intensifying competition in the battery industry.

At that time, Samsung SDI's stock price showed a significant drop temporarily, but it bounced back a few days later, as overseas investors bet large on the company, after then-Samsung SDI CEO Jun Young-hyun told reporters that his company was "considering" building a battery plant in the U.S.

Some retail investors here have therefore raised questions about the credibility of Citigroup's latest report on Samsung SDI.

However, some industry insiders have expressed concerns about Samsung Group's willingness to foster its battery business, considering the fact that only semiconductors, bio and IT were mentioned in the chaebol group's plan to invest 450 trillion won over the next five years.

When the group unveiled a 180 trillion won investment plan in 2018 and another 240 trillion won investment plan in 2021, the battery unit was also absent from the list of the group's key strategic businesses.

Samsung SDI has also been considered to have remained passive about global expansion in comparison to LG Energy Solution and SK on, as it has focused more on product quality and financial stability.