Is 'SK Innovation' Reviving Thanks to COVID-19 Vaccine Benefits?

Despite sharp drop due to battery lawsuit loss
securities firms advise "should use as a buying opportunity at low prices"

[Asia Economy Reporter Minji Lee] SK Innovation is expected to experience increased stock price volatility after receiving a 10-year export ban order from the U.S. International Trade Commission (ITC). However, securities firms advise that this is only a short-term negative factor and that the correction should be seen as a buying opportunity.

As of 10:55 a.m. on the 15th, SK Innovation was trading at 283,000 KRW, down 4.5% from the previous trading day. SK Innovation preferred shares were also trading down 6.5% at 201,000 KRW at the same time. SK Innovation's stock price fell as much as 268,000 KRW (9%) early in the session but the decline has narrowed over time.

On the 10th (local time), the ITC ruled on a lawsuit filed by LG Energy Solution in April 2019 for trade secret infringement, ordering a 10-year import ban in the U.S. on battery cells, modules, related parts, and materials produced by SK Innovation. This confirmed LG Energy Solution's final victory by upholding the early loss ruling from February last year.

This ruling is expected to inevitably cause a short-term decline in SK Innovation's stock price, increasing losses for individual investors. SK Innovation's stock price surged about 56% this year, driven by net purchases of 623.7 billion KRW by individual investors. The average purchase price for individuals during this period was 278,590 KRW. Conversely, foreign and institutional investors sold stocks worth 345.8 billion KRW and 293.2 billion KRW respectively this year, with average selling prices of 288,531 KRW and 279,534 KRW.

However, securities firms say the decline in SK Innovation's stock price should be used as a low-price buying opportunity. This is because SK Innovation is expected to benefit from the revaluation of the refining sector following COVID-19 vaccinations. In fact, Samsung Securities named SK Innovation, along with Samsung C&T and Kia Motors, as beneficiaries of the COVID vaccine on the same day. Analyst Myungjun Kwon of Samsung Securities said, "The refining sector was hit as hard as travel and airline stocks by COVID-19," adding, "If economic activities resume through vaccines, oil demand can quickly normalize, highlighting SK Innovation as a vaccine beneficiary sector."

Attention should also be paid to the possibility that the two companies may reach a settlement regarding the ITC ruling. There is a 60-day review period by the U.S. President before the ruling takes effect, and if the two companies settle, both the ITC import ban and the ongoing civil lawsuit in the Delaware Federal District Court can be withdrawn. Researcher Junghwan Kim of Korea Investment & Securities evaluated, "It is unclear whether President Joe Biden will exercise his veto power, and even if he does, the burden of civil litigation is significant," adding, "Given that SK Innovation will not give up its U.S. secondary battery business, the possibility of a settlement has increased."

This content was produced with the assistance of AI translation services.