SK Inno Begins Transition to Battery Corporation... Business Split as Catalyst

[Asia Economy Reporter Hwang Yoon-joo] As the electric vehicle market grows faster than expected, there is an analysis that SK Innovation's corporate value should be reassessed in the market. Although it has been recognized as a leading oil refining company so far, it is explained that it should be evaluated as a battery company following the business split.

According to the industry on the 13th, the value of the battery business reflected in SK Innovation's current stock price is only 3 trillion won. This figure considers the equity value of SK Energy, which SK Innovation owns 100% of, and the market capitalization of SKIET (60%).

SK Innovation's battery business is expected to turn a positive operating profit on an annual basis in 2022. Since SK Innovation began investing seriously in the battery business in 2017, sales volume has doubled every year, and revenue has been increasing significantly since 2019. In the first half of this year, battery business sales exceeded 1 trillion won. With the completion of overseas factory expansions in the US and other countries, sales growth is expected to accelerate further.

The reason the corporate value is not properly recognized despite the growth of the battery business is that the market still perceives SK Innovation as an oil refining company. It is evaluated that the value of the battery business is not being properly acknowledged.

Jeon Woo-je, a researcher at Hanwha Investment & Securities, said, "SK Innovation's physical division is essential for rapid expansion of battery production capacity, and now is the time to reflect the battery value as overselling has occurred due to market concerns," adding, "The current order backlog exceeds 1000 GWh, which is similar to CATL (market cap 234 trillion won) and LG Chem (market cap 60 trillion won)."

The battery business investment cost announced by SK Innovation is 17 to 18 trillion won. SK Innovation stated that it can secure the funds necessary for nurturing the battery business through internal cash flow. This is because the market conditions of the refining and chemical businesses are rapidly recovering, and the operating profit of the battery business is also rising quickly.

SK Innovation holds the position that the battery business spin-off is essential for business funding and management strategy. Becoming an independent corporation is advantageous for establishing joint ventures with automakers and can reduce investment costs by half. However, contrary to market concerns, SK Innovation is not expected to rush an initial public offering (IPO).

Park Il-seon of KTB Investment & Securities analyzed, "There is a possibility that the battery new corporation's IPO schedule will not proceed quickly," and "Since an IPO is expected to take at least over a year, applying the current SK Innovation discount is premature."

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