Securities firms in and outside Korea are sending positive signals to SK Innovation’s oil refining business and battery business.

Lee Jin-myung, senior researcher at Shinhan Financial Investment, said in a report dated January 19th that “2022 will be a good year for both SK Innovation’s traditional and new growth businesses,” and proposed a target price of KRW 380,000 for SK Innovation. Researcher Lee explained: “Refining margin this year has risen by about 4 US dollars per barrel compared to last year to reflect the tight market situation, and it will continue to increase.” “Battery business sales are expected to grow 96% in 2022, and operating profit will be around KRW 10.2 billion, a turn to black.”

He continued, “We expect significant sales growth when SK On, a subsidiary of SK Innovation, starts the commercial operation of the first battery plant in the U.S. and operates the second battery plant in Hungary.” “In the second half of this year, the effect of reducing fixed costs will occur, and profitability will be improved gradually,” Lee emphasized.

Kang Dong-jin, a researcher at Hyundai Motor Securities, also said about SK Innovation in a report dated January 18: “The company’s oil refining business is expected to record robust growth thanks to rising oil prices and improved refining margins.” “The battery business will exceed KRW 1 trillion in quarterly sales for the first time in the fourth quarter of 2021,” he added. For these reasons, researcher Kang chose SK Innovation as the top pick stock of the industry

In the same report, researcher Kang predicted, “SK Innovation’s battery business is expected to turn to profit in the second half of 2022, while emphasizing that the value of this business will increase rapidly.” “The growing order backlog reflects this,” he explained. “Hyundai Motor Securities estimates SK Innovation’s battery business value at KRW 26 trillion.”

Dow Jones also cited this report from Hyundai Motor Securities and highlighted that SK Innovation’s electric-vehicle battery business may post a record 4Q revenue of over KRW1 trillion. “The brokerage expects the South Korean energy company’s EV-battery unit to make a profit turnaround in the second half of 2022, when its U.S. factories start operating.”

On the same day, Baek Young-chan, a researcher at KB Securities, said in a report that “SK Innovation’s battery business is expected to start full-fledged growth from 2022.” “Profit is expected to be KRW 72.7 billion (turning to a profit from the previous year),” he continued. In addition, researcher Baek commented. “As oil demand increases following the economic recovery, we expect a very strong phase in refining margins.”

Earlier, on January 11 (local time), SK Innovation was the only Korean company to be included in the ‘50 Company Stocks to Watch in 2022′ selected by Bloomberg Intelligence, a research institute Bloomberg. 

Horace Chan of Bloomberg Intelligence said, “Aggressive global expansion and tie-ups with Ford Motor Co. and Hyundai Motor Co. could transform SK Innovation Co. from an old-economy company with roots in petroleum and petrochemicals into the world’s third-largest supplier of batteries for electric vehicles in 2022.” “Pre-IPO funding for the segment – a plan the company is considering – or taking it public could enhance SK’s value,“ Chan added.