KB Securities noted on the 28th that SK Innovation's performance in the first quarter of this year is expected to fall short of expectations due to weakening demand in refining and electric vehicles caused by economic slowdown. They maintained an investment opinion of 'buy' and lowered the target stock price from 150,000 won to 143,000 won. The previous trading day's closing price for SK Innovation was 121,900 won.
KB Securities estimated that SK Innovation will record an operating profit of 53.6 billion won in the first quarter (January to March) of this year. This is a figure that represents a 91% decrease from the same period last year and falls 88.3% short of market expectations (457.8 billion won).
The contribution to operating profit by institutional sector is 277.5 billion won for E&S (city gas), 151.7 billion won for refining, chemicals, and drilling, and -375.6 billion won for the battery, materials, and other sectors.
The E&S institutional sector, responsible for city gas sales, expects a decline in profits due to falling gas and electricity prices compared to the previous year. Research Institute analyst Jeon Woo-je stated, "The main indicator, the power market price (SMP), has decreased," and noted that, "If long-term contracts related to liquefied natural gas (LNG) are secured from President Trump, performance improvements will be seen."
In the secondary battery and materials sectors, it is expected that the losses that began last year will continue. The research institute analyst stated, "We expect the advanced manufacturing tax credit (AMPC) subsidies to help recover performance, but ongoing low U.S. plant utilization rates and delays in European carbon dioxide regulations will lead to continued losses."
However, in the refining sector, there is a positive outlook that the strength of base oil will continue despite the decline in refining margins. The research institute analyst stated, "It is unfortunate that the rise in oil prices has halted, but using the weighted average method for inventory accounting may have allowed for a higher inventory effect compared to competitors," and added, "The long-term balance between supply and demand is stable."
Consequently, the estimated annual operating profit has been lowered from 2.503 trillion won to 362 billion won, a decrease of 85.5%.