[Click eStock] "SK IE Technology, Continued Earnings Slump Expected... Target Price Down"

Target Price Revised Downward by 29% Compared to Previous Level

On the 5th, NH Investment & Securities downgraded the target price of SK IE Technology from 85,000 KRW to 60,000 KRW, anticipating continued poor performance for the time being. The investment rating was maintained at 'Buy.'

Joo Min-woo, a researcher at NH Investment & Securities, explained, "We lowered both earnings and multiples, reducing the target price by 29%. It is inevitable that poor performance will continue for the time being due to weak front-end demand and the process of resolving excess inventory."

Although the stock price has fallen significantly, a rebound is expected to be difficult. Researcher Joo analyzed, "In addition to poor performance caused by weakening front-end demand, uncertainties regarding the sale to improve SK On's financial structure have caused SK IE Technology's stock price to drop 47% compared to the beginning of the year. A stock price rebound is possible only when three conditions are met: recovery of SK On's shipment volume, acquisition of new customers, and resolution of sale uncertainties. While SK On's shipment volume is expected to see a limited rebound starting from the second quarter of this year, acquiring new customers and resolving sale uncertainties are unlikely to yield immediate results."

The second-quarter performance is also expected to fall short of expectations. NH Investment & Securities estimates that SK IE Technology's second-quarter sales will be 68.5 billion KRW, a 54.9% decrease compared to the same period last year, with an operating loss of 47.9 billion KRW, turning to a deficit. Researcher Joo stated, "SK IE Technology's second-quarter performance is expected to slightly miss the consensus (average securities firm forecast). Although separator shipment volume is expected to improve compared to the previous quarter, the absolute value is still projected to be weak." He added, "Currently, separator inventory is about four months' worth, which is high compared to the appropriate inventory level (one month). Since SK On's sales volume is expected to rebound in the second half of the year, separator inventory is likely to return to an appropriate level during the second half." The utilization rates by region are estimated to be in the 30% range for Korea, 60% for Poland, and 30% for China.