[Click eStock] "Volkswagen's Slow Production Recovery Leads to Poor Performance"… SKIET Target Price Lowered

[Asia Economy Reporter Ji Yeon-jin] NH Investment & Securities announced on the 27th that it has lowered the short-term earnings forecast for SK IE Technology due to slower-than-expected production recovery at Volkswagen, cutting the target stock price by 9% to 155,000 KRW. However, considering the sales targets, it stated that this is the final phase of the earnings downgrade and maintained a buy rating.

Joo Min-woo, a researcher at NH Investment & Securities, said, "Due to semiconductor shortages and the Ukraine war, Volkswagen's European MEB production, which had dropped to 800-900 units per day at the beginning of the year, recovered to 1,300 units in mid-June," adding, "As the impact of production disruptions is fading, a clear earnings improvement is expected from the third quarter of this year. Attention should be paid to the mid-to-long-term earnings direction through new customer acquisition in Europe and new expansions in North America in the second half of the year." He also pointed out that the current stock price is excessively discounted at 12 times EV/EBITDA for 2024 compared to the domestic anode material average of 17 times.

Sales for the second quarter of this year are expected to decrease by 1% year-on-year to 153.7 billion KRW. Operating profit is forecasted to drop 99% during this period to 200 million KRW. Although the operating rate of the Poland Plant 1 was expected to exceed 30% in the first quarter and reach 40-50% in the second quarter, it is estimated to still be in the 30% range.

For the full year, sales are projected to increase by 21% year-on-year to 733 billion KRW, while operating profit is expected to decrease by 40% to 53.7 billion KRW. Researcher Joo expressed optimism, stating, "Considering Volkswagen's electric vehicle sales target of 700,000 units this year and the first quarter sales of 99,000 units, a steep earnings recovery in the second half is expected to be clear."