SK Innovation's stock has risen for four consecutive days, likely influenced by positive news regarding its subsidiary SK On's order wins. Shareholders of SK Innovation, whose investments have been tied up for several years since the pandemic, are now paying close attention to recent re-rating developments. The securities industry views SK On's order win as a positive factor for SK Innovation but considers the absorption merger with SKIET as negative.
According to data from the Korea Exchange on the 1st, as of 2:26 p.m., SK Innovation's stock price rose by 9,400 won (7.49%) from the previous day to reach 134,900 won. This level represents the highest since May 7 based on closing prices. Compared to the 52nd-week low of 87,700 won recorded on June 26, the stock has risen by approximately 50,000 won.
SK Innovation's stock has climbed for four consecutive trading days. The recent bullish trend is analyzed to be driven by positive news regarding its subsidiary SK On's order wins.
On the 27th of last month, SK On signed a battery cell supply contract with NeoVolt Power, a U.S.-based manufacturer of energy storage systems (ESS). Under the agreement, SK On will supply lithium iron phosphate (LFP) pouch battery cells with a total capacity of 9GWh (gigawatt-hours) over five years from 2027 to 2031. Industry sources estimate the value of this supply contract at approximately 1.5 trillion won.
SK On is also working on an additional cooperation agreement with NeoVolt Power for another 9GWh capacity within this year. If this deal is finalized, the total cooperation scale between the two companies will expand to 18GWh.
The securities industry interprets this order win as a positive event. However, news of the merger between SK Innovation and SKIET is viewed as negative for SK Innovation's stock valuation.
Jeon Yu-jin, a researcher at iM Securities, stated, "What draws more attention than this 9GWh contract is the possibility of additional contracts for direct sales by SK On." He added, "We also consider scenarios where ESS units are supplied to power plants within the group." Jeon further noted, "However, this ESS contract alone will absolutely fall short of resolving dissatisfaction and concerns regarding support for both SK On and SKIET."
A researcher at Shinhan Investment Corp also remarked, "While improvements in performance and cash flow centered on refining and lubricants remain valid, further gains depend on reducing battery losses, expanding ESS orders, decreasing net borrowing, and normalizing SKIET." He added, "Due to uncertainties surrounding the merger, the pace of short-term revaluation is likely to be limited."
Meanwhile, SK Innovation saw a sharp rise in 2020 when interest in secondary batteries surged. By early 2021, its stock price reached the 320,000 won range. During this period, the increase amounted to approximately 490%. Today's stock price is less than half of that peak.
SK Innovation's sharp decline was caused by an electric vehicle (EV) demand slump. As demand for EV batteries slowed, the industry faced stagnation marked by reduced operating rates and declining profitability. SK On, a subsidiary of SK Innovation, also saw its financial health deteriorate due to losses. In response, SK Innovation implemented a rebalancing among group affiliates to improve the situation. It absorbed its cash cow, SK E&S, as an internal independent company (CIC), followed by sequentially merging SK Trading International, SK Entum, and SK Enmove into SK On to strengthen cash flow.
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