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"Gear Up for an Exciting Leap in the Second Half of 2023"



SK Innovation, a leading oil refining company, is expected to experience a leap in profitability in the second half of 2023. Analysts at NH Investment & Securities have raised their target price for SK Innovation to W250,000, reflecting positive indicators for the oil refining industry. The company's earnings are expected to strengthen in response to improving battery earnings, rising oil prices, and refining margins. This positive outlook has made SK Innovation a top pick in the sector.

In their assessment, NH Investment & Securities considered factors such as the company's net debt level, operating value, and market sentiment towards separators. They also adjusted their earnings expectations for the petroleum division, taking into account the recovery in refining margins and oil prices. The recent rise in Dubai crude price and Singapore refining margin further supports the expectation of stronger earnings for SK Innovation in the second half of 2023.

While SK Innovation's earnings in the second quarter of 2023 were sluggish, the market is anticipating an upswing in earnings for the company in the second half of the year. The company recorded a decrease in sales and operating losses in the petroleum and battery divisions. However, the positive performance of the chemicals and lubricants divisions helped offset some of the losses. NH Investment & Securities expects the petroleum division's operating profit to improve in the third quarter due to strong refining margins and the elimination of negative lagging effects and inventory valuation losses. Battery earnings are also expected to continue improving.

Despite the disappointing second-quarter results, SK Innovation's share price increased by 1.34% on the day of its earnings release, indicating that the market is focused on the anticipated improvement in earnings in the second half of 2023. With positive indicators for the oil refining industry and the company's strong position in the sector, SK Innovation is poised for growth and profitability in the coming months.

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