NH Investment & Securities lowered its operating profit forecasts for SK Innovation for this year and next, and cut the target stock price by 7% to 140,000 won on the 17th.
Choi Young-kwang, a researcher at NH Investment & Securities, explained, "While we raised the earnings forecasts for the oil and E&P sectors reflecting the strong oil prices, we lowered the earnings forecasts for the battery and chemical sectors," adding, "Operating profit forecasts for 2024 and 2025 were lowered by 6% and 5%, respectively, compared to previous estimates."
Researcher Choi analyzed, "SK On is undergoing a production line conversion at its U.S. plant due to weak demand across the entire value chain from Ford and production cuts," and "As a result, sales volume is expected to sharply decline and the Advanced Manufacturing Production Credit (AMPC) weakness will likely cause first-half 2024 earnings to deteriorate compared to the previous year."
However, he predicted a performance trend of lower earnings in the first half and higher earnings in the second half, influenced by a rebound in selling prices in the latter half, increased sales volume due to normalization of the U.S. plant, and expansion of AMPC. Accordingly, first-quarter operating profit is expected to be 407.5 billion won, in line with market consensus.
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