The securities industry said that the battery and separator business of SK Innovation is currently excessively undervalued and expected its full valuation to be reflected in the market cap next year. In addition, the industry expected that the turnaround of the company’s main business and rapid top-line growth of the battery business will lead to good results.

In a report dated November 15^th, Eugene Investment & Securities researcher Hwang Seong-hyeon commented, “SK Innovation’s operating profit is expected to exceed KRW 3.5 trillion in 2022 following the improvement of the fundamentals of the main business and the investments in new business will continue, utilizing the cash flow.” “Considering the recent business agreement with Doosan Fuel Cell for a new hydrogen business (hydrogen production and joint development of fuel cells) and equity investment in solid power to develop all-solid-state batteries, SK Innovation’s long-term growth story is still valid,” added Hwang as he proposed a target stock price of KRW 375,000.

Kiwoom Securities researcher Lee Dong-wook earlier mentioned in a report on November 11^th, “SK Innovation’s battery and separator business value is not being reflected in its market cap,” and emphasized, “Considering the amount of order backlog, which is No. 1 in the industry, the prospect of a turnaround next year, and an increase in the proportion of assets, the value is expected to be reflected in the market cap from next year.”

Researcher Lee said in his analysis, “SK Innovation’s (subsidiary SK On)’s order backlog for batteries increased more than 26 times just in four years from 60 GWh (gigawatt hour) in 2017 to 1.6 TWh (terawatt hour) as of 2021. And SK Innovation plans to invest a total of 17-18 trillion won in the global battery market, including the US and China, by 2030 in consideration of the sharply increased order backlog.” In addition, “In the case of SK innovation’s separator business (subsidiary SK IE Technology), the new operation of the second plant in China and the first plant in Poland, which were built this year, and the new operation of the third plant in China will result in economies of scale, and in turn, the upward trend will continue,” he added.

Meanwhile, Researcher Hwang Seong-hyeon of Eugene Investment & Securities raised the target stock price of SK IE Technology to KRW 230,000 in a report dated November 15^th. Researcher Hwang said, “Stability is the hot topic in the battery industry. With the rapid growth of the electric vehicle market, the demand for separators used in car batteries is rapidly increasing, and the thermal stability of separators is also emerging as an important issue.”

In the same report, Researcher Hwang wrote, “In particular, since the stability of the battery must be secured at a high temperature of 150°C or higher, and Ceramic Coated Separator (CCS) is being accepted as a standard, the demand for wet separators that are easy to slim down is expected to increase rapidly.” Also, he elaborated, “While other companies’ batteries are facing fire accident problem, the need for SK IE Technology’s separator will increase even more.” In addition, he emphasized, “According to the estimates by Eugene Investment & Securities, the Tier-1 separator market in 2023 will encounter a supply shortage, which will further highlight the premium of top-tier companies such as SK IE Technology.”