Stock Analysis & Valuation Samsung SDI Co., Ltd. (0L2T.L)

• Previous Close: £56.80
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, £	Upside, %
Artificial intelligence (AI)	n/a	n/a
Intrinsic value (DCF)		n/a
Graham-Dodd Method	148.60	162
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

Samsung SDI Co., Ltd. is a leading South Korean manufacturer specializing in advanced energy storage solutions and display technologies. Headquartered in Yongin, the company operates through two core segments: Energy and Display. The Energy segment focuses on producing high-performance lithium-ion batteries for electric vehicles (EVs), energy storage systems (ESS), and consumer electronics, positioning Samsung SDI as a key player in the global battery market. The Display segment manufactures plasma display panels (PDPs) for televisions, though this segment has diminished in relevance due to industry shifts toward OLED and LCD technologies. Samsung SDI benefits from its affiliation with the Samsung conglomerate, leveraging R&D capabilities and supply chain synergies. As the demand for EVs and renewable energy storage grows, Samsung SDI is strategically positioned to capitalize on these trends, supported by its strong technological expertise and global manufacturing footprint.

Investment Summary

Samsung SDI presents a compelling investment opportunity due to its strong position in the rapidly expanding EV battery and energy storage markets. The company reported robust financials for FY 2023, with revenue of €22.7 trillion (KRW) and net income of €2.01 trillion (KRW), reflecting solid profitability. Its diluted EPS of 29,397 KRW and operating cash flow of €2.1 trillion (KRW) underscore financial stability. However, high capital expenditures (€4.05 trillion KRW) indicate aggressive expansion, which could pressure short-term liquidity. The company’s beta of 0.968 suggests moderate volatility relative to the market. Risks include intense competition in the battery sector, fluctuating raw material costs, and geopolitical uncertainties affecting supply chains. Long-term growth prospects remain strong, driven by global electrification trends and Samsung SDI’s technological leadership.

Competitive Analysis

Samsung SDI holds a competitive edge in the lithium-ion battery market, benefiting from advanced R&D, economies of scale, and integration within the Samsung ecosystem. The company is a key supplier to major automakers, competing with global battery giants like LG Energy Solution and Panasonic. Its strength lies in high-energy-density batteries, fast-charging technology, and a diversified customer base. However, competition is intensifying, particularly from Chinese players like CATL, which dominate in cost efficiency and production scale. Samsung SDI’s Display segment is less significant due to the decline of PDPs, but its Energy segment is well-positioned for long-term growth, supported by increasing EV adoption and renewable energy storage demand. The company’s vertical integration and strong partnerships with automakers provide stability, but reliance on external suppliers for critical materials (e.g., lithium, cobalt) remains a vulnerability. Strategic investments in next-generation solid-state batteries could further solidify its market position.

Major Competitors

• LG Energy Solution (373220.KS): LG Energy Solution is Samsung SDI’s primary domestic rival, specializing in EV batteries and energy storage. It boasts strong partnerships with automakers like Tesla and General Motors. While it leads in global market share, its profitability is sometimes pressured by high R&D and expansion costs. Compared to Samsung SDI, LG has a broader customer base but faces similar supply chain risks.
• Panasonic Corporation (6752.T): Panasonic is a key competitor in EV batteries, notably through its joint venture with Tesla (Gigafactory). It excels in battery longevity and safety but lags behind Samsung SDI in energy density innovation. Panasonic’s strong brand and diversified electronics business provide stability, but its slower expansion in battery capacity could hinder long-term competitiveness.
• Contemporary Amperex Technology Co. Limited (CATL) (300750.SZ): CATL is the global leader in EV battery production, dominating cost efficiency and scale. Its strengths include aggressive pricing and strong domestic demand in China. However, geopolitical tensions and reliance on the Chinese market pose risks. Samsung SDI differentiates itself with superior technology and a more diversified global footprint.
• BYD Company Limited (1211.HK): BYD is a vertically integrated competitor, producing both EVs and batteries. Its in-house supply chain reduces costs, but its technology is perceived as less advanced than Samsung SDI’s. BYD’s strong presence in China is an advantage, but international expansion remains a challenge compared to Samsung’s established global partnerships.