[Click e-Stock] "SK IE Technology, Impact of Fixed Cost Burden and Price Reduction"... Target Price Down

[Asia Economy Reporter Lee Jung-yoon] On the 23rd, KB Securities downgraded its operating profit estimates for SK IE Technology for this year and 2023 due to increased fixed cost burdens from declining utilization rates and the impact of price reductions, lowering the target stock price by 25% to 120,000 KRW. However, the buy rating was maintained.

SK IE Technology's sales for the third quarter of this year are expected to increase by 6% year-on-year to 161.3 billion KRW, with an operating loss of 3.6 billion KRW, falling short of consensus estimates. Lee Chang-min, a researcher at KB Securities, explained, "The separator business is expected to return to profitability as shipments recover due to easing semiconductor supply issues and increased demand from European automakers," but added, "The new business is expected to continue incurring related losses due to delayed market development."

SK IE Technology's performance this year is estimated at sales of 634.2 billion KRW, a 5% increase from the previous year, with an operating loss of 20.9 billion KRW. The outlook is for poor performance due to decreased front-end demand caused by economic slowdown and supply disruptions, initial operating costs from new lines in China and Poland, and rising energy prices due to the Russia-Ukraine war. Additionally, aggressive price reductions to expand market share are also expected to have an impact.

The researcher stated, "A full-scale performance rebound is expected from 2023, when the European electric vehicle market recovers and Poland phase 2 operations begin," adding, "Given the high fixed cost ratio characteristic of the separator business, demand recovery is expected to lead to rapid performance improvement, so we maintain a positive outlook."

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