Intrinsic Value Samsung SDI Co., Ltd. (0L2T.L)

• Previous Close: £56.80
• Intrinsic Value: n/a
• Upside potential: n/a%

Stock Valuation Context

Business Model And Market Position

Samsung SDI Co., Ltd. operates as a key player in the electrical equipment and parts industry, specializing in advanced energy storage solutions and display technologies. The company’s business is divided into two core segments: Energy, which focuses on high-performance lithium-ion batteries for electric vehicles and energy storage systems, and Display, which produces plasma display panels (PDPs) for televisions. Samsung SDI has established itself as a leader in the battery sector, benefiting from the global shift toward electrification and renewable energy. Its strong R&D capabilities and partnerships with major automakers position it competitively in the EV battery market, while its display segment, though smaller, remains relevant in niche applications. The company’s vertically integrated supply chain and technological expertise provide a durable moat in an industry characterized by rapid innovation and stringent performance requirements.

Revenue Profitability And Efficiency

In FY 2023, Samsung SDI reported revenue of EUR 22.71 trillion, with net income reaching EUR 2.01 trillion, reflecting robust profitability. The diluted EPS stood at EUR 29,397, underscoring strong earnings power. Operating cash flow was healthy at EUR 2.10 trillion, though capital expenditures were significant at EUR -4.05 trillion, indicating heavy investment in capacity expansion and R&D to maintain technological leadership.

Earnings Power And Capital Efficiency

The company’s earnings power is evident in its substantial net income and operating cash flow, supported by high-margin battery products. Capital efficiency is balanced by aggressive reinvestment, with capex significantly exceeding operating cash flow, reflecting a growth-oriented strategy. The focus on premium battery solutions for EVs and energy storage likely drives above-industry-average returns on invested capital.

Balance Sheet And Financial Health

Samsung SDI maintains a solid balance sheet, with cash and equivalents of EUR 1.52 trillion against total debt of EUR 5.80 trillion. The debt level is manageable given the company’s strong cash generation and market position. The liquidity position appears adequate to support ongoing investments and operational needs, though leverage metrics should be monitored given the capital-intensive nature of the industry.

Growth Trends And Dividend Policy

Growth is driven by rising demand for EV batteries and energy storage systems, with the company well-positioned to benefit from global decarbonization trends. The dividend per share of EUR 0.12 suggests a modest payout, aligning with a strategy prioritizing reinvestment over shareholder returns. Future growth will likely hinge on technological advancements and scaling production to meet surging battery demand.

Valuation And Market Expectations

With a market cap of EUR 7.55 billion and a beta of 0.97, Samsung SDI is viewed as a stable yet growth-oriented investment. The valuation reflects expectations for sustained demand in its core markets, particularly EVs. Investors likely price in continued margin expansion and market share gains, though competitive pressures and raw material costs remain key risks.

Strategic Advantages And Outlook

Samsung SDI’s strategic advantages include its technological leadership, strong OEM relationships, and vertical integration. The outlook is positive, supported by secular trends in electrification and renewable energy. However, the company must navigate supply chain volatility and intensifying competition. Long-term success will depend on maintaining innovation and cost efficiency in a rapidly evolving industry.

Sources

Company filings, market data