20151203-三星证券-Smart_car_forum_takeaways_18页_3mb

Sector Update Summary

Core Content

This document outlines the evolving landscape of the tech and auto sectors, with a focus on the future of smart cars and the potential for a paradigm shift similar to that of the smartphone industry. It highlights the strategic moves of major players like Apple, Google, and Samsung, as well as the challenges and opportunities facing Korean firms in the global smart car market.

Main Viewpoints

1. Smart Car Paradigm Shift

• The auto industry is undergoing a transformation akin to the smartphone revolution of 2007.
• Professor Lim Bumsuk compares the current auto industry to dinosaurs before the meteor strike, predicting a similar fate for traditional vehicles as environmental concerns grow.
• The shift from combustion engine cars to EVs is inevitable, driven by pollution issues and the rise of electric vehicles.
• Smart cars are expected to become the new digital hub, with value chains shifting from power trains to platforms, networks, and content.

2. Role of Tech Firms

• Apple and Google are leading the charge in smart car development, acquiring companies related to mapping, voice recognition, and ADAS.
• These firms are likely to dominate the future auto industry, much like they did in the smartphone sector.
• Korean tech firms must adapt and focus on design and software to compete, as these are key differentiators in the smart car era.

3. Battery Industry Outlook

• The global rechargeable battery market is projected to grow at a 70% CAGR to 378GWh by 2020.
• EV battery prices are expected to fall significantly, from USD231/kWh in 2015 to USD144/kWh in 2020.
• Korean battery makers like Samsung SDI and LG Chem are expected to maintain a premium over Chinese rivals for the next 2-3 years, though the gap may narrow.

4. Auto Parts and Ecosystems

• Auto parts makers like Hyundai Mobis, Mando, and S&T Motive are key players in the smart car era.
• IT firms are likely to outsource car production to global parts makers with proven track records, especially in ADAS and autonomous driving systems.
• Korean firms must prepare for a shift in the auto industry’s competitive landscape, as IT and auto firms collaborate to build new ecosystems.

5. Software and Infotainment

• Software is becoming a critical differentiator in the auto industry, with a need for advanced AI, big data, and platform dominance.
• WindRiver Korea's Kim Taeyong emphasizes the importance of software in smart cars, noting that it requires significantly more lines of code than smartphones.
• Tesla's open-patent strategy and Apple's focus on ADAS are key indicators of the direction of the smart car industry.

6. Investment Recommendations

• Samsung SDI is recommended due to its potential to profit from the EV and smart car boom.
• LG Electronics and LG Innotek are highlighted as possible "Foxconns" of the smart car era, due to their design and technology capabilities.
• Hyundai Mobis, Mando, S&T Motive, and Woory Industrial are suggested as firms to monitor for growth in the global auto parts market.

Key Information

Target Prices

• LG Electronics: KRW75,000 (42.9% upside)
• Samsung SDI: KRW140,000 (16.7% upside)
• LG Innotek: KRW120,000 (21.2% upside)
• Hyundai Mobis: KRW305,000 (26.3% upside)
• Mando: KRW210,000 (25.7% upside)
• S&T Motive: KRW85,000 (6.5% upside)

Market Trends

• EV demand is strongest in China, with significant growth expected.
• The US and China are leading in the development of EVs and autonomous vehicles.
• The auto industry is expected to see a shift from traditional power trains to platforms, networks, and content.

Challenges and Opportunities

• Korean firms must compete with Chinese battery and EV manufacturers.
• The smart car era will require collaboration between IT and auto firms.
• Software and design are the most important factors for success in the smart car market.
• The future of the auto industry is uncertain, with traditional automakers at risk of obsolescence if they fail to adapt.

Strategic M&A Activities

• Apple has acquired several startups related to smart car technology, including those focused on 3D mapping, voice recognition, and AI.
• Google is also investing heavily in smart car technologies, aiming to build a competitive platform.
• Automakers like VDA (BMW, Audi, Mercedes) are acquiring mapping firms to counter Google's ambitions.

Investment Ideas

• Rechargeable Battery Players: Samsung SDI and LG Chem are key players with strong positions in the EV battery market.
• Smart Car Design and Software Firms: LG Electronics and LG Innotek are highlighted for their potential to lead in design and software innovation.
• Auto Parts Makers: Hyundai Mobis, Mando, S&T Motive, and Woory Industrial are recommended for monitoring due to their strategic positions in the global parts market.

Conclusion

The smart car era is expected to bring significant changes to the auto industry, similar to the smartphone revolution. Korean firms must focus on design, software, and strategic partnerships to remain competitive. The future of the industry will be shaped by the convergence of IT and auto sectors, with the potential for a new value chain centered around platforms, networks, and content. Investors should keep an eye on firms that are adapting to these changes and building the necessary capabilities to thrive in the new market.