[Click e-Stock] "SK IE Technology Faces U.S.-Driven Risks... Target Price Lowered"

Target Price Lowered by 20% from Previous Level

On January 8, KB Securities lowered its target price for SK IE Technology from 30,000 won to 24,000 won, citing an inevitable decline in sales to the United States. The investment opinion was maintained at 'Neutral.'

Changmin Lee, a researcher at KB Securities, explained, "The reason for lowering the target price is that the estimated operating loss for this year has been revised from 87.4 billion won to 150.1 billion won, as we expect a significant decrease in U.S. electric vehicle sales following the end of the Inflation Reduction Act (IRA) electric vehicle purchase subsidy."

SK IE Technology's fourth-quarter results for last year are expected to fall short of market expectations. Researcher Lee stated, "SK IE Technology's fourth-quarter results for last year are estimated at 64.5 billion won in sales, up 9% year-on-year, and an operating loss of 59.6 billion won, which would fall below the consensus (the average forecast by securities firms). The separator sales volume for the fourth quarter is estimated at 92 million square meters, a 21% decrease from the previous quarter. Due to the aftermath of the IRA expiration, U.S. electric vehicle sales have plummeted since last October, making a decline in sales to the U.S. inevitable. Additionally, separator inventory levels are still estimated to be above normal, which is expected to result in a low utilization rate," he analyzed.

With the expiration of the IRA electric vehicle purchase tax credit and the continued anti-environmental vehicle stance of the Trump administration, it is unlikely that sales to the U.S. electric vehicle market will show an upward trend in the near future. As a result, the key to future performance recovery appears to be energy storage systems (ESS). Researcher Lee noted, "The European electric vehicle market is also expected to have limited potential for performance improvement due to fierce competition with Chinese electric vehicle and battery companies, so the only factor that could enable a rebound in performance will be ESS. Fortunately, demand for non-Chinese ESS batteries and materials is rapidly increasing, driven by expanded investments in artificial intelligence (AI) in North America and the Chinese government's announcement of an export licensing system. Going forward, the size and quality of ESS orders will determine the pace of performance recovery," he predicted.