Equity Analysis /
South Korea

KR : SK Innovation - Refining recovery and battery acceleration

    CGS-CIMB
    13 May 2021
    Published byCGS-CIMB

    While market is focusing on slow battery margin improvements on W1tr costs (royalty) from 2023, we expect its battery losses to narrow fast from 2H21F. We value SKI’s battery unit at W20tr (vs. LGC’s W80tr, SDI’s W48tr) on backlog (W80tr) and capacity (over 125GWh in 2025 vs. 40GWh in 2021F). Reiterate Add, with an SOP-based TP of W350k. The battery new orders in May and battery EBITDA turnaround in 2H21F could re-rate the stock.