[Click eStock] "SK, Subsidiary Performance Slump... Target Price Down"

Hana Securities lowered the target price for SK from 280,000 won to 240,000 won on the 17th. This is due to a decrease in equity value caused by poor performance of major unlisted subsidiaries. This marks the third consecutive downward revision following November last year and May this year. However, the investment opinion was maintained as 'Buy.'

SK recorded consolidated sales of 31.9 trillion won and an operating profit of 700 billion won in the second quarter. Compared to the same period last year, sales decreased by 2%, and operating profit plummeted by 80.4%. The profitability of almost all subsidiaries worsened due to weak energy prices and a downturn in the semiconductor market. In particular, SK Innovation posted an operating loss of 106.8 billion won in the second quarter due to inventory losses from falling oil prices and a decline in refining margins, turning to a deficit, and SK Biopharm also continued its deficit with an operating loss of 18.9 billion won. SK Square has recorded operating losses for three consecutive quarters due to poor business performance of its subsidiary SK Hynix.

Unlisted subsidiaries also generally showed poor performance; SK E&S's operating profit decreased by 44.7% compared to the same period last year, and SK Pharmteco continued its deficit due to one-time expenses and delays in new product production schedules. Siltron's operating profit margin declined due to increased electricity costs and decreased sales volume.

Choi Jung-wook, a researcher at Hana Securities, said, "While the poor performance of subsidiaries has continued for three consecutive quarters through the second quarter of this year, the decline in earnings of some major subsidiaries is narrowing, suggesting that the turning point for a trend reversal has passed," and added, "Due to the upward trend in international energy prices and recovery in the semiconductor industry, the performance of major subsidiaries is expected to improve overall in the second half of the year."

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