[Click eStock] "SK Innovation Faces Ongoing Shareholder Value Dilution and Industry Uncertainty"

Hyundai Motor Securities analyzed on August 1 that shareholder value dilution and ongoing industry uncertainty continue to affect SK Innovation. The target price was lowered to 110,000 won, and the investment rating was also downgraded to 'Market Perform'.

In the second quarter, SK Innovation recorded sales of 19.3 trillion won and an operating loss of 417.6 billion won. Compared to the same period last year, sales increased by 2.7%, but the company continued to post a deficit.

Kang Dongjin, a researcher at Hyundai Motor Securities, stated, "The second quarter results were disappointing, falling short of consensus," and added, "However, SK On's performance was more resilient than expected."

Kang Dongjin explained, "SK On's results benefited from an Advanced Manufacturing Production Credit (AMPC) of 273.4 billion won, with AMPC receipts improving by more than 100 billion won quarter-on-quarter." He also projected, "Sales were strong due to inventory buildup demand ahead of mutual tariff changes by key customers."

He anticipated that the company would face another challenging period in the second half of the year. He said, "In the second half, the launch of new models at the European plant and robust sales to Volkswagen are expected to improve utilization rates. However, in North America, sales are likely to slow again due to weak demand following the early termination of the 30D incentive."

He further analyzed, "Refining margins have been on a continuous decline since the stabilization in the Middle East. While diesel and gas oil margins remain strong due to tight supply-demand conditions in the United States, most other product margins are deteriorating."

He added, "SK Innovation has indicated plans for an additional capital raise of about 2 trillion won in the future," and continued, "Concerns over further capital raising are likely to continue diluting shareholder value and maintaining industry uncertainty, so a short-term rebound in the share price is unlikely."