Yuanta Securities Korea analyzed that SK Innovation's financial burden would continue this year, leading to a lower performance expectation. It has lowered the target stock price from 170,000 won to 150,000 won while maintaining an investment opinion of 'buy.' The closing price of SK Innovation on the previous trading day was 119,300 won.
Yuanta Securities Korea projected that SK Innovation would record an operating loss of 442.9 billion won in the second quarter of this year, with the loss margin expected to widen. While the battery loss margin has decreased, the sluggish performance in the refining sector is largely to blame.
Singapore's refining margin rose to $2.4, but oil prices fell by $9, and the exchange rate of the won against the U.S. dollar also dropped by 50 won, leading to an expected inventory loss of 450 billion won. However, with the operation of Hyundai Motor's metaplants for electric vehicles in the U.S., battery sales are expected to grow by 10-15% compared to the previous quarter, with U.S. production subsidies anticipated to increase to 221 billion won.
This year, SK Innovation's revenue is expected to reach 75.3 trillion won, with an operating loss of 296.3 billion won. Yuanta Securities Korea forecasted that operating profit and loss would turn to a loss for the first time in five years.
Hwang Gyu-won, a researcher at Yuanta Securities Korea, noted, "As pressure from inventory losses continues due to falling international oil prices, persistent poor performance from global battery oversupply is also evident."
The researcher pointed out that the financial burden is increasing. SK Innovation's capital expenditure (Capex) is 6.5 trillion won, but the net cash generated from operations is only 1.3 trillion won, resulting in a cash shortfall of about 5.2 trillion won.
The researcher stated, "The scale of net borrowing is also expected to increase from 29 trillion won at the end of last year to 35 trillion won at the end of this year, and there remains a repayment obligation of 8.3 trillion won, excluding net borrowings."