[Click eStock] "SK Innovation, Possibility of Introducing Physical Division Regulations"... Target Price Up

[Asia Economy Reporter Ji Yeon-jin] Hyundai Motor Securities announced on the 18th that it is maintaining a buy rating on SK Innovation, raising the target price to 350,000 KRW, reflecting a reduced holding company discount rate due to the high possibility of introducing a minority shareholder protection system amid financial authorities' review of physical division and subsidiary listing regulations.

SK Innovation's sales in the fourth quarter reached 14 trillion KRW, a 19.5% increase compared to the same period last year, and operating profit is expected to turn positive at 630.3 billion KRW. The refining business is expected to perform well due to rising oil prices and improved refining margins, but the chemical sector is anticipated to underperform due to weakness in key products.

The secondary battery business is projected to exceed 1 trillion KRW in quarterly sales for the first time, with profitability expected to turn positive in the first half of this year. Although performance may be somewhat sluggish in the first half due to ongoing semiconductor shortages, improvement is expected to accelerate from the second half with the start of operations at the U.S. plant and easing semiconductor supply issues.

The value of the secondary battery business managed by SK On is expected to increase rapidly. The growing order backlog reflects this, with the secondary battery business valued at 26 trillion KRW. This valuation is based on LG Energy Solution (LGES)'s business value of 93 trillion KRW (market capitalization of 98 trillion KRW), considering sales.

Researcher Kang Dong-jin of Hyundai Motor Securities stated, "The introduction of minority shareholder protection measures by financial authorities and fundraising through Pre-IPO will gradually resolve the discount caused by simultaneous subsidiary listings, highlighting undervaluation appeal," adding, "There is also a strong possibility of revaluation of the secondary battery business division's value following LGES's listing."

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