[Click eStock] SK Innovation's 'Financial Risk'... Investment Opinion 'Neutral'

[Asia Economy Reporter Lee Seon-ae] Hana Financial Investment stated on the 1st that despite a positive outlook for SK Innovation, it is necessary to confirm whether financial burden relief is achievable for further stock price increases, maintaining a 'neutral' investment rating and a target price of 280,000 KRW.

SK Innovation has raised its battery production capacity target for 2025 from the existing 100GW to 125GW. The short-term targets are 30GW in 2020, 40GW in 2021, and 85GW in 2023. China (17→35), the United States (Georgia, 0→22), and Europe (Hungary, 8→23) are the key regions for production expansion. With the steep increase in production scale, sales and operating profit are also expected to show a clear upward trend. The company's battery sales targets are 1.6 trillion KRW in 2020, mid-3 trillion KRW in 2021, and mid-5 trillion KRW in 2022, with operating profit margins turning positive in 2022 and achieving high-single-digit growth by 2025. However, despite the positive vision, there is a definite point to confirm for further stock price gains: whether financial burden relief is possible. In a situation where the core business is sluggish and litigation uncertainties are high, more than 4 trillion KRW is required annually for battery investments.

Yoon Jae-sung, a researcher at Hana Financial Investment, analyzed, "Considering the current high net debt, it is thought necessary to alleviate financial burdens soon through asset sales or the listing of SK IET." He added, "Since the company has set a ceiling of 10 trillion KRW for net debt, it is necessary to monitor whether this target is achieved."

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