'Saejang Kim Cheol-jung, an Expert in Finance and Strategy, 6 Months... SKIET's Value Doubled'

Market Cap from 3.8429 Trillion KRW to 7.3437 Trillion KRW
Membrane Business Turns Profitable in Q1 This Year

The market capitalization of SK IE Technology (hereinafter SKIET) has nearly doubled since the beginning of this year. This increase is attributed not only to improved performance but also to growing expectations of benefits from the U.S. Inflation Reduction Act (IRA), as well as aggressive leadership by President Kim Cheol-jung, who has been visiting production sites for three consecutive months to spearhead domestic and international business operations, thereby enhancing corporate value. Known within the SK Group as a financial expert and strategist, President Kim took on the mission to end the losses that had continued since the fourth quarter of 2021 and joined the company at the end of last year.

On the 12th, SKIET’s closing price rose 4.8% from the previous day to 103,000 KRW. It has roughly doubled from the 50,000 KRW range at the start of the year. Market capitalization also grew from 3.8429 trillion KRW to 7.3437 trillion KRW during the same period. SKIET is the world’s third-largest separator manufacturer. A separator is a thin film that physically separates the cathode and anode inside a battery. It is a key battery component regulated by the IRA and directly affects battery performance and safety. The separator accounts for 16% of battery costs.

SKIET ranks second in the wet separator market, which has high entry barriers, following China. According to the 2020 global wet separator market share published by Chinese research institute EVTank, China’s largest wet separator company, Changxin New Materials, holds 29% market share, ranking first, while SKIET holds 10.8%, ranking second. China’s Sinoma is third with 10.6%, followed by Japan’s Toray and Asahi Kasei with 9.7% each. Others account for 29.9%. Wet separators are thinner and have higher strength and safety than dry separators, making them suitable for high-spec electric vehicles. Wet separators accounted for 67% of the separator market as of 2021.

Kim Cheol-jung, President of SKIET (center), visited the SKIET production plant in Changzhou, China, on March 14 and toured the production facilities with officials.
[Photo by SKIET]

SKIET was established in April 2019 through a spin-off of SK Innovation’s materials business division. Sales have increased for three consecutive years since 2019, but operating profits have fluctuated. Operating profit rose from 80.5 billion KRW in the first year to 125.2 billion KRW in the second year, then decreased to 89.2 billion KRW, and recorded a loss of 52.3 billion KRW last year.

The atmosphere changed after President Kim joined. The separator business, which accounts for 99.88% of sales, posted an operating profit of 1.8 billion KRW in the first quarter of this year, turning profitable compared to the previous quarter. Just one month after his appointment as president, in January this year, he started with a visit to the Chungbuk Jeungpyeong plant, followed by visits to SK Innovation’s R&D Center for Environmental Science and Technology, Changzhou in China in March, and the production site in Poland in April. He inspected factory facilities and discussed cooperation plans with local government officials. In May, he secured $300 million (approximately 400 billion KRW) in investment funds from the International Finance Corporation (IFC), which were invested in expanding the Polish plant. SKIET is expanding its 2nd to 4th plants in Poland, scheduled for completion in 2024, which will secure a total production capacity of 2.7 billion square meters.

Born in 1966, President Kim graduated from Seoul National University with a degree in International Economics. He joined Yukong, the predecessor of SK Innovation, in 1992 and has held key planning and finance positions such as head of the finance team, head of management planning, head of strategy, and head of portfolio division.

Expectations for performance are also rising. According to earnings estimates compiled by financial information provider FnGuide from domestic securities firms, SKIET is expected to achieve an operating profit of 8.5 billion KRW in the third quarter of this year. The separator business is also expected to remain profitable in the second quarter following the first quarter. Mirae Asset Securities forecasted that SKIET would record an operating profit of 1 billion KRW in the second quarter, citing continued high operating rates at the Polish plant and improving business conditions in China.

SKIET Poland Factory Exterior
[Photo by SKIET]

The IRA has made SKIET’s entry into the North American market not a choice but a necessity. Earlier this month, SKIET made visible progress in entering North America by signing a long-term supply contract (minimum 14.6 billion KRW) for secondary battery separators targeting North America and other overseas regions. An SKIET official said, "We are internally reviewing the location and scale of the North American plant," adding, "We plan to announce it in the second half of this year, but the exact timing is undecided." The company plans to start local commercial production around 2028, when the localization ratio of battery components to receive IRA electric vehicle subsidies is expected to increase to 90%.

The company faces the challenge of diversifying its customer base. Researcher Koo Sung-jung of DS Investment & Securities said, "The proportion of sales accounted for by affiliate SK On is high," but added, "Since production capacity is expanding in Europe and domestically, SKIET should be able to handle additional customer volumes beyond SK On."

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