[Click eStock] "SKC, Deficit and Restructuring Pressure... Investment Opinion 'Hold'"

Yuanta Securities maintained a Hold rating on SKC on the 14th, stating, "We raised the target price to 100,000 KRW (previously 84,000 KRW) by partially reflecting the possibility of glass substrates, but considered this year's poor performance and additional restructuring."

On the same day, Hwang Kyu-won, a researcher at Yuanta Securities, said, "The annual operating loss this year is expected to be 146.4 billion KRW, marking a loss for the second consecutive year. Amid losses, financial burdens will increase due to an 800 billion KRW investment annually."

He added, "Following the sale of the film business in 2022 and the sale of the polyurethane business last year, copper foil restructuring from the second half of this year to next year and additional sales of shares in the chemical sector are pending. In particular, if the copper foil facilities are relocated from Jeongeup, Jeonbuk, South Korea, to Malaysia, temporary costs such as facility depreciation expenses are a concern."

The preliminary results for the first quarter of this year are expected to show sales of 415.2 billion KRW, an operating loss of 76.2 billion KRW (operating loss margin of 18.4%), and a net loss attributable to controlling shareholders of 26.3 billion KRW. The operating loss marks six consecutive quarters of poor performance since turning to a loss in the fourth quarter of 2022.

Researcher Hwang analyzed, "Losses continued due to poor sales with a 30% operating rate of secondary battery copper foil, oversupply in the chemical sector of propylene oxide (PO), a raw material for insulation and moisturizers, and new businesses (glass substrates, secondary battery anode materials, etc.). The loss trend is expected to continue into the second quarter as well, mainly due to global oversupply of PO and secondary battery copper foil."