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[Alpha Biz= Reporter Kim Minyoung] BNK Investment Securities Lowers SK Innovation Target Price Amid Delays in Battery Turnaround
On the 5th, BNK Investment Securities revised its target price for SK Innovation downwards from 200,000 won to 170,000 won, a 15% reduction. The firm maintained its "Buy" rating but cited the delayed turnaround in the battery sector as a limiting factor for the company's rebound.
BNK Investment Securities noted that SK Innovation's consolidated operating profit for the second quarter was 45.8 billion won, falling short of expectations. While the refining sector performed relatively well due to inventory gains, the lubricant, petrochemical, and battery segments all underperformed compared to forecasts.
The decline in the lubricant sector was attributed to lower spreads, and the petrochemical sector's performance suffered from reduced volumes due to scheduled maintenance. The battery segment was hit hard by lower EV demand, leading to decreased operating rates, sales, and profits.
Despite receiving 111.9 billion won in advanced manufacturing production tax credits (AMPC) during the second quarter, SK Innovation faced increased fixed costs from reduced factory utilization and initial costs from new operations in Hungary. As a result, the battery sector recorded its largest quarterly loss of 460.1 billion won.
Looking ahead, BNK Investment Securities anticipates that operating profit in the second half of the year will improve to around 300 billion won per quarter, driven by gains in the refining sector. They expect refining margins to rebound from June and remain strong through August and September due to increased travel demand and lower OSP prices.
The firm also predicts that the petrochemical sector will show improvement following maintenance and that the lubricant segment will maintain operating profits in the range of 100 billion to 150 billion won.
AlphaBIZ Kim Minyoung(kimmy@alphabiz.co.kr)
