[Click eStock] SKC Advances Anode and Cathode Material Businesses... Securing Growth Potential

NH Investment & Securities Report

[Asia Economy Reporter Minji Lee] NH Investment & Securities maintained a buy rating and a target price of 210,000 KRW on SKC on the 27th, expecting growth driven by its push into the secondary battery business.

Recently, SKC formalized its plans to enter the secondary battery anode and cathode material businesses during its Investor Day. The company plans to enter the market by securing core technologies through joint ventures with global firms. For the anode material business, detailed business structures are expected to be disclosed in the fourth quarter. By adding anode and cathode material businesses to its existing copper foil business, SKC aims to achieve secondary battery material sales of 4 trillion KRW by 2025. In the semiconductor materials sector, SKC announced the commercialization of 'High-Performance Computing Glass Substrates,' aiming to enhance IT material growth by diversifying semiconductor material products and securing new technology products.

The company plans to invest approximately 5 trillion KRW by 2025 in secondary battery materials, semiconductor materials, and eco-friendly materials (PBT resin). The large-scale investment funds will primarily be sourced from internal cash flow, bonds, and asset sales, with no current plans for capital increases or public offerings.

In the third quarter, SKC is expected to record its highest quarterly performance due to favorable chemical market conditions and growth in the copper foil business. Operating profit is anticipated to reach 136.6 billion KRW, a 159.8% increase compared to the same period last year. In the chemical business, the epoxy market remains strong, maintaining high profitability for PO and PPG, while demand for high-value-added product PG continues to grow steadily.

Hwang Yusik, a researcher at NH Investment & Securities, explained, “In SK Nexilis’s copper foil business, operating profit is expected to increase significantly due to the expansion of new volumes from Line #5, which started operations in June,” adding, “Line #6 is scheduled to be completed in the latter half of the fourth quarter, which is expected to further increase copper foil sales in 2022.”

SKC aims to secure a total copper foil production capacity of 250,000 tons by 2025, targeting the global market share No. 1 position with a 35% share. The company stated, “After completing the production line by the end of the year, we expect to secure a production capacity of 52,000 tons. Facilities in Malaysia (50,000 tons) in 2023, Europe (100,000 tons) in 2024, and the United States (50,000 tons) in 2025 will be gradually operated,” and analyzed, “Copper foil supply and demand will remain tight over the next five years, maintaining high profitability.”