[Click eStock] "SK Networks, Q4 Loss... Cost Increase Expected This Year"

[Asia Economy Reporter Minji Lee] Hana Financial Investment maintained a buy rating and a target price of 7,200 KRW for SK Networks on the 7th. Although the rental business has established itself as a core operation, it is judged that more time is needed to recover profitability.

The company recorded sales of 2.5 trillion KRW in the fourth quarter, a 14.8% increase compared to the same period last year, but posted an operating loss of 64 billion KRW, turning to a deficit. Yuje-seon, a researcher at Hana Financial Investment, said, "A loss of 15 billion KRW was reflected due to the discontinuation of the Most division," and added, "In the trading division, a large-scale deficit was recorded reflecting the Middle East bond write-offs that occurred in the past."

The information and communication sector grew in scale due to high-priced device sales, but profit margins declined due to increased marketing expenses. The Car Life (rental car) division incurred integration-related costs but is expected to enter a long-term profitability recovery trend.

SK Magic is expected to expand its business scale further this year as the number of rental accounts is rapidly increasing. However, costs are expected to rise due to new product launches in the first half of the year and normalization efforts for the Malaysian subsidiary.

Researcher Yuje-seon explained, "Although external growth of core businesses is expected this year, costs will occur in the SK Magic and rental car business divisions," adding, "In the second half of the year, a large cash inflow from business unit sale contracts will stand out, leading to reduced interest expenses and improved net profit."

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