Samsung SDI Stock: Down But Not Out? Why Q4 2025 is the Key for Investors

Samsung SDI, Awaiting a Q4 Turnaround: Crisis or Opportunity?

Samsung SDI, Awaiting a Q4 Turnaround: Crisis or Opportunity?

Samsung SDI, a leader in South Korea's secondary battery industry. With its recent stock performance and earnings announcement causing anxiety for many investors, let's explore together whether this is a moment of crisis or a new opportunity.

Why Q2 2025 Earnings Fell Short of Expectations

According to the DS Investment & Securities report, Samsung SDI's Q2 2025 performance unfortunately fell short of market expectations (consensus). While revenue was about 3.2 trillion KRW, the operating loss reached 397.9 billion KRW. So, why did this happen?

The biggest reason was the slump in the large-to-medium-sized battery division. This was due to delays in electric vehicle (EV) supply to major clients and the increased burden of fixed costs from its joint venture (JV) with Stellantis. Furthermore, tariffs on Energy Storage Systems (ESS) exported to the US also contributed to the decline in profitability.

However, it's not all bad news. A positive signal was detected in the small-sized battery division, where the deficit margin narrowed. This was thanks to improved demand for Uninterruptible Power Supplies (BBU) used in AI data centers, as well as for mobility applications like power tools and electric bicycles.

Is a Q4 Turnaround Possible?

The much-anticipated turnaround to profitability is unfortunately expected to be delayed to the fourth quarter of 2025. The difficulties in the large-to-medium-sized battery division are likely to continue in Q3, with the possibility of a temporary shutdown of the Stellantis JV being raised. With the recovery of the European EV market focused on low-to-mid-range models, it is difficult for Samsung SDI, which has strengths in premium models, to see immediate benefits.

Ultimately, for Samsung SDI to smile again, the most crucial factor is the recovery of EV-bound large-to-medium-sized battery shipments. A gradual improvement in performance can be expected if local production in the US begins in earnest from Q4 and demand in the small-sized battery sector remains steady.

New Hope Blossoming Amidst Crisis

Even in difficult times, Samsung SDI is steadily preparing for the future. Two new business portfolios are particularly noteworthy.

1. LFP Batteries: LFP batteries, with their high price competitiveness, are expected to be the key to improving profitability. They are anticipated to play a significant role in the ESS market in the short term and the low-to-mid-range EV market in the long term.

2. 46-Series Cylindrical Batteries: Having recently won an order from a European client, this division is starting to show results in the EV market, expanding beyond the existing mobility market. This is strong evidence that Samsung SDI's technological prowess and future growth engines are still valid.

Three Key Investment Strategies

So, what strategies should investors interested in Samsung SDI and the secondary battery sector consider? Based on the report, here are three proposed investment strategies.

1. Long-Term Blue-Chip Investing: This strategy focuses on the company's long-term growth potential rather than its current short-term difficulties. If you believe that Samsung SDI will lead the future EV market with its new portfolios like LFP and the 46-series, the current price correction could be used as a buying opportunity.

Potential Risk: If the recovery of the EV market is slower than expected or the performance of new businesses falls short of expectations, the stock price recovery may be delayed.

2. Split Purchase Strategy: To reduce the burden of stock price volatility, this strategy involves buying shares in several installments while monitoring the market, rather than investing all funds at once. You can take advantage of the expected volatility around the Q3 earnings announcement.

Potential Risk: If the stock price rebounds faster than expected, the lower initial investment proportion could lead to lower-than-expected returns.

3. Portfolio Diversification: This is a strategy to diversify risk by investing not only in battery cell manufacturers like Samsung SDI but also in related material (cathode, anode, etc.) or equipment companies. It's a way to invest in the growth of the entire secondary battery industry ecosystem.

Potential Risk: Depending on technological changes or market conditions for specific materials or equipment, the returns of other stocks in the portfolio may be sluggish.

Disclaimer: This article is for informational purposes based on the provided materials and is not a recommendation to buy or sell any particular stock. All investment decisions and responsibilities lie with the investor. Please conduct thorough research and seek professional advice before investing. All investments carry the risk of principal loss.

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