[Click eStock] "SK Inno, Battery Deficit Continues... Performance Improvement Is Key"

On the 2nd, IBK Investment & Securities evaluated that SK Innovation may continue to experience a slowdown in performance due to the expanding losses in the battery sector. Accordingly, they maintained a 'Buy' investment rating and a target price of 145,000 KRW.

Lee Dong-wook, a researcher at SK Innovation, stated, "The operating loss in the second quarter of this year was 45.8 billion KRW, turning to a deficit compared to the previous quarter and falling short of market expectations (269.7 billion KRW)." The operating loss in the battery sector was particularly notable. The battery division recorded an operating loss of 460.1 billion KRW, continuing its deficit from the previous quarter.

Lee explained, "This is due to the simultaneous decline in prices following the drop in metal prices, decreased operating rates caused by weakened demand from OEM companies, and increased fixed costs." Additionally, the initial costs incurred from operating the Iv?ncsa plant in Hungary also appear to have impacted the performance slowdown.

To respond to the slowdown in electric vehicle demand growth caused by the chasm effect, as well as China's strategy of excess production capacity and standardization control, continuous capital expenditures (CAPEX) are necessary for a full lineup of regional and product portfolios, expansion of production capacity per unit, strengthening competitiveness in raw material procurement, and diversification of customers.

In particular, Lee emphasized that "appropriate financial measures, such as mergers to strengthen the financial structure, are essential for SK Innovation." He diagnosed, "Battery expansion projects without support from the group or implicit government assistance face a crossroads, with rapid withdrawal and delays expected in offshore expansion projects on paper. Future stock prices will still ultimately depend on the improvement movements in the battery sector's performance."

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