[Click eStock] "SKIET, Earnings Recovery Distant... Investment Rating and Target Price Lowered"

On the 5th, KB Securities downgraded its investment opinion on SK IE Technology (SKIET) from 'Buy' to 'Hold,' citing a delayed recovery in front-end demand, and lowered the target price to 38,000 KRW.

Lee Chang-min, a researcher at KB Securities, stated, "SKIET's sales plunged 72% year-on-year to 50.8 billion KRW, recording an operating loss of 73 billion KRW, missing consensus estimates," and added, "Third-quarter sales volume fell 11% from the second quarter to 62 million square meters."

The researcher explained, "Although supply to a new customer, a North American electric vehicle OEM, has begun, sales volume declined compared to the previous quarter due to weak demand from the major customer SK On," and noted, "Given the separator business's characteristics, where fixed costs outweigh variable costs, the drop in operating rate also led to deteriorated profitability."

He further diagnosed, "With the continued weak demand from SK On, which accounts for an absolute majority of sales, a significant loss due to the operating rate gap is expected for the time being."

Lee added, "Considering the delayed recovery in front-end demand, we have lowered the assumed average annual production capacity growth rate for the next seven years (2024?2030E) from 14% to 12%, and also revised down the average operating rate during the same period from 67% to 58%."

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