Mirae Asset Securities logo

Getting back on track after a brief detour

Recommendation

• We maintain our Buy recommendation and target price of W300,000 on SK Innovation. We expect SK On to swing to an operating profit in 3Q23 and believe that sentiment regarding the cell maker will likely improve going forward amid easing concerns over funding and customer/product diversification. Notably, refining margins have recently been picking up sharply, which will likely lead to improvement in oil refining earnings in 3Q23.

Market status and outlook

• For 2Q23, SK Innovation recorded an operating loss of W106.8bn amid weakness at the oil refining unit. In 3Q23, however, we expect the company to return to positive territory, supported by a recovery in oil refining earnings and meaningful margin improvement at SK On. Factoring in the advanced manufacturing production credit (AMPC), we believe that the cell maker will swing to an operating profit in 3Q23.