[Click eStock] "SK Target Price '220,000 KRW'... Investment Opinion 'Buy' Maintained"

Hyundai Motor Securities maintained a target price of 220,000 KRW and a buy rating for SK on the 26th.

On a consolidated basis, net debt stood at 60 trillion KRW, down 1.4 trillion KRW from the previous quarter. SK decreased by 200 billion KRW, SK Ecoplant by 300 billion KRW, and SK Telecom by 700 billion KRW. SK Innovation increased by 700 billion KRW.

It is expected that the improvement trend will continue due to the merger of SK Innovation and SK E&S and the incorporation of Ecoplant's Essencore-Airplus business. SK Ecoplant incorporated Essencore, which operates the semiconductor module distribution business, and SK Materials Airplus, which operates the industrial gas business, as subsidiaries. Both companies' performance improvements were confirmed due to industry recovery.

The performance improvements of unlisted subsidiaries such as SK Siltron and Pharmteco in the third quarter are also positive. The net asset value (NAV) is 36 trillion KRW, with a discount rate of 70.6%. The discount rate relative to NAV is at a historic high due to increased borrowings and concerns about group liquidity. Given the confirmed improvement, a reduction in the discount rate, i.e., an excess rise in SK's stock price, is anticipated.

In the third quarter, consolidated sales were 30.6 trillion KRW (-9.5% YoY), operating profit was 513.1 billion KRW (-81% YoY), and net income attributable to controlling interests was 511.5 billion KRW (+56.6% YoY). Operating profit declined due to poor performance of consolidated subsidiaries including SK Innovation, but net income attributable to controlling interests was supported by increased equity-method income from the grandchild company SK Hynix. Following 500 billion KRW in the first quarter and 700 billion KRW in the second quarter, 1.2 trillion KRW was generated in the third quarter. Researcher Kim Han-yi of Hyundai Motor Securities evaluated, "Due to the nature of holding companies, large non-operating losses such as reductions in equity investments tend to occur, but the profit level can be raised."