[Click eStock] "SK Ino, Order Slowdown? ... 'Actually Better'"

[Asia Economy Reporter Kwon Jae-hee] Although SK Innovation's stock price fell 9.4% compared to the previous month due to a slowdown in secondary battery orders, securities firms have predicted that this could rather be an opportunity. This is interpreted as a reallocation of investments focused on profitability rather than a slowdown in orders.

On the 19th, KB Securities attributed the recent decline in SK Innovation's stock price to the failure of SK On (unlisted) to secure orders in Turkey, increased financing costs, and concerns over a slowdown in electric vehicle sales.

The order news from battery cell companies is not as stimulating as it was from 2021 to early 2022, and although growth potential remains high, the order backlog does not increase by 60% with each quarterly earnings announcement. Additionally, LG Energy Solution's reconsideration of its 1.7 trillion won investment in Arizona and SK On's failure to secure orders in Turkey, combined with a tightening financial market due to high interest rates, have led to concerns about secondary batteries.

KB Securities viewed this situation as actually becoming advantageous for secondary battery companies. It is known that SK On is proceeding with a joint venture (JV) with Hyundai Motor in the United States.

Jeon Woo-je, a researcher at KB Securities, analyzed, "The cancellation of SK On's investment in Turkey is interpreted as an investment reallocation rather than a lack of funds. Considering that SK On's share of the total investment amount of 3 to 4 trillion won in Turkey was about 1.2 to 1.6 trillion won, and that approximately 2.8 trillion won was injected through pre-IPO and SK Innovation's capital increase, if profitability had been good, the investment would have been possible."

Regarding the recent slowdown in orders, a positive evaluation is emerging based on the fact that the order backlog is already full, so future investments will focus on 'profitability.'

Jeon said, "As the secondary battery market is shifting to a sellers' market, order contracts are expected to become increasingly favorable. Since domestic secondary battery companies are focusing on investments in the United States, new orders will be centered on high profitability."