[Click eStock] "SKC, 1Q Loss Expected to Continue... Target Price Down"

[Asia Economy Reporter Son Sunhee] Meritz Securities lowered the target price for SK Group's chemical and materials company SKC from 180,000 KRW to 150,000 KRW on the 7th. This marks the third consecutive downward revision since April last year (260,000 KRW).

SKC recorded an operating loss of 24.3 billion KRW in the fourth quarter of last year. This is attributed to the overall sluggish chemical industry conditions, margin deterioration due to rising raw material prices, the decline in the KRW-USD exchange rate, and performance bonus payments.

Meritz Securities forecasted that SKC would continue to incur losses until the first quarter of this year but would rebound starting from the second quarter. In the copper foil segment, negative factors such as the decline in the KRW-USD exchange rate and additional increases in domestic facility electricity costs are expected to result in an average profit margin of 4.5% in the first half of the year. However, they added that with the first operation of the Malaysian copper foil facility (over 50,000 tons) in the second half, both scale growth and profit margins are expected to rebound.

In the chemical segment, a loss is expected to continue in the first quarter, followed by a return to profitability from the second quarter. Due to the reopening of economic activities in China and the rebound in demand for various chemical products, product prices are expected to strengthen in the second half of the year.

Researcher Noh Woo-ho of Meritz Securities stated, "The business conditions for major sectors this year are expected to follow a 'high in the first half, low in the second half' pattern, with an estimated operating profit of 186 billion KRW."