Shinhan Investment Corp announced on October 8 that it has raised its target price for SK Innovation from 200,000 won to 240,000 won, citing expected performance improvements in the refining, lubricants, and energy storage (E&S) sectors. The investment opinion remains a 'buy.'
Lee Jin-myung, a senior researcher at Shinhan Investment, stated, "We have adjusted the target price upward to reflect improved earnings estimates due to the strong performance in refining, lubricants, and E&S. The key variables for stock prices will be the improvements in refining and lubricants in the second half, along with orders for battery energy storage systems (ESS)."
In the E&S sector, the introduction of Barossa liquefied natural gas (LNG) is expected to complete the profit generation structure. Lee noted, "With the introduction of Barossa gas and Darwin LNG, E&S has established a business structure that spans resource development, liquefaction, shipping, and domestic power generation. We anticipate securing 1.3 million tons of long-term supply through existing facilities, which will reduce dependence on spot procurement."
He added, "As repeated shipments and domestic power generation increase, price competitiveness will translate into power generation profits. This will establish a source of income that mitigates future earnings volatility and expand the multiple re-evaluation of the LNG business."
Lee also mentioned, "Production and shipping are quickly normalizing, indicating that we are past the initial operational phase. The investment efficiency of existing infrastructure, combined with the domestic power material substitution effect, will gradually enhance the profit contribution of Barossa volumes in the second half."
He concluded, "E&S is expected to see expanded profit momentum due to rising system marginal prices (SMP) and the introduction of Barossa LNG, supporting an increase in corporate value."
* This article has been translated by AI.
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