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Comment on rights issue: Final stage of growing pains

• In our view, the size of SK Innovation’s latest rights issue is not significant enough to have a material impact. We continue to believe the company will see rapid earnings growth over the medium/long term.

• While the rights issue will dilute shares by roughly 8.1%, this should be partially offset by debt repayment and pre-IPO funds (SK On).

• The company stated that the purpose of the rights issue is to pursue new businesses, mainly low-carbon technology and carbon capture, utilization, and storage (CCUS).