[Click e-Stock] "SK Inno, Battery Profit Declines Excluding AMPC... Target Price Down"

On the 6th, NH Investment & Securities lowered the target price for SK Innovation from 210,000 KRW to 190,000 KRW. The investment rating was maintained as 'Buy.'

SK Innovation recorded sales of 19.9 trillion KRW and an operating profit of 1.56 trillion KRW in the third quarter, successfully returning to profitability. Due to rising refining margins and oil prices, the petroleum division alone posted an operating profit of 1.1 trillion KRW. Although the chemical and lubricant sectors experienced deteriorating market conditions, operating profit improved compared to the previous quarter due to inventory valuation gains.

On the other hand, the battery division's sales fell 14.2% quarter-on-quarter to 317.3 billion KRW due to price declines and weakened demand, resulting in an operating loss of 86.1 billion KRW. The deficit was somewhat reduced by receiving 209.9 billion KRW from the U.S. Advanced Manufacturing Production Credit (AMPC) thanks to yield improvements at the North American plant. However, considering that the AMPC was 119.8 billion KRW in Q2 (excluding 47.2 billion KRW retroactively applied from Q1), the actual battery profitability is understood to have further deteriorated.

Choi Young-kwang, a researcher at NH Investment & Securities, said, "Although the battery division's operating loss narrowed in Q3, a downward revision of future earnings expectations is necessary. While profitability in the battery division is expected to continue improving in Q4 due to AMPC and increased sales volume, the petroleum division is expected to return to an operating loss, leading to a decrease in consolidated operating profit."

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