Wind Power Boom... SK D&D Aiming for Record Performance

Expectations for No.1 in Private Wind Power Generation... Fuel Cells Also 'Good'

[Asia Economy Reporter Eunmo Koo] SK D&D is aiming for its best-ever performance this year. Thanks to the government's 'Green New Deal' policy, domestic wind power projects are gaining attention, while the fuel cell business is also showing strong growth.

According to the Korea Exchange on the 27th, SK D&D's stock price closed at 40,250 KRW, up 10.58% (3,850 KRW) from the previous trading day. During the previous session, it reached an intraday high of 40,350 KRW, setting a new record. Since the second half of the year, SK D&D's stock price has risen sharply by 49.6%, with a 20.3% increase just this month, drawing a steep upward curve. It is the first time in about 4 years and 2 months since June 13, 2016 (40,156 KRW) that SK D&D’s stock price has surpassed 40,000 KRW on a closing basis since its listing on the KOSPI market in June 2015.

The recent surge in SK D&D's stock price is due to expectations that it will become the number one private wind power company in Korea this year as its wind power-related business expands. SK D&D, which is developing and operating two wind power project sites in Gasi-ri, Jeju Island, and Uljin, Gyeongbuk, is currently pushing forward the development of an 83-megawatt (MW) wind power project in Gunwi, Gyeongbuk. If this project, which is currently undergoing permits and approvals, breaks ground within the year, SK D&D’s operational capacity will total 163 MW, making it the top private wind power company in Korea.

The government's announcement of the Green New Deal policy, which has created a favorable atmosphere for the expansion of renewable energy generation, is also a positive factor for SK D&D. According to the government’s announcement, renewable energy generation capacity, currently at about 12.7 gigawatts (GW) this year, is planned to increase to 26.3 GW by 2022 and 42.7 GW by 2025. Researcher Sera Park of Shin Young Securities evaluated, "As long as there are no changes to the mid- to long-term plans, the policy can do enough to foster the domestic wind power market."

Not only wind power but also the fuel cell business is considered a factor for future performance improvement. SK D&D and SK Engineering & Construction hold exclusive domestic supply rights for the main equipment of fuel cells from Bloom Energy, a U.S. company. Bloom Energy, along with Doosan Fuel Cell, dominates the domestic fuel cell market. Currently, they are pursuing 135 MW of self-developed projects and 90 MW of joint development projects. Considering a project cost of about 5.5 billion KRW per MW, this translates to securing approximately 1.2 trillion KRW in engineering, procurement, and construction (EPC) sales.

Researcher Kyungja Lee of Samsung Securities explained, "SK D&D is involved in the entire project process not only by supplying main equipment but also by investing equity as a developer-operator, giving it optimal conditions as a business partner," adding, "Starting with recognizing 220 billion KRW in sales from projects in Chungju and Eumseong in the fourth quarter, fuel cell construction of 20 to 40 MW is expected annually, forecasting annual fuel cell sales of 100 to 200 billion KRW."

With the expansion of wind power and the addition of fuel cell business sales, SK D&D is expected to set a new record for its best performance this year. According to financial information provider FnGuide, SK D&D’s sales this year are estimated to increase by 69.2% from last year to 769.3 billion KRW, and operating profit is expected to grow by 77.0% to 145.7 billion KRW. Both figures represent all-time highs.