“Earnings Windfall”... This Stock Is Expected to Soar from 130,000 Won to 200,000 Won on a 20-Fold Surge in Operating Profit [Shareholder Club]

[Financial News] Yuanta Securities Korea maintained its “buy” recommendation on SK Innovation on the 15th and raised its target price from 170,000 won to 200,000 won. SK Innovation closed at 136,700 won on the 14th, giving it 46% upside to the new target price.

Hwang Kyu-won, a researcher at Yuanta Securities Korea, said, “The 2026 earnings windfall is expected to be much larger than anticipated,” and projected annual revenue of 102.2974 trillion won, operating profit of 1.00553 trillion won, representing an operating margin of 9.8%, and net income attributable to controlling shareholders of 359.9 billion won. This is more than 20 times SK Innovation’s 2025 operating profit of 44.87 billion won.
The projected surge in earnings was attributed to a “triple-tsunami effect”: disruptions to crude oil supplies caused by delays in the Iran war, delays in restarting Middle Eastern petrochemical facilities damaged after the conflict, and damage to energy facilities caused by the Russia-Ukraine war. These factors are estimated to have caused disruptions of about 14% in global refining and petrochemical supply and demand.
By segment, operating profit from oil refining is expected to surge from 349.9 billion won last year to 6.1675 trillion won this year, while the lubricants segment is projected to rise from 607.6 billion won to 2.1821 trillion won. The SK E&S segment, which handles power generation and city gas, is also expected to increase from 681.1 billion won to 955.4 billion won. Meanwhile, the battery segment’s loss is forecast to narrow from 923.5 billion won to 96.4 billion won.

The brokerage also forecast that the effects of ongoing business restructuring would begin to materialize in earnest. Hwang noted that, following the SK E&S merger in 2024 and SK On’s withdrawal from its U.S. joint venture with Ford Motor Company in 2025, three restructuring measures remain from the second half of 2026 through 2027.
The merger with SK ie technology (SKIET), announced in August, will dilute the number of shares outstanding by 2.6%. In the fourth quarter, SK City Gas Holdings, a city-gas subsidiary, is expected to be sold to Kohlberg Kravis Roberts (KKR), with 3.2 trillion won in redeemable convertible preferred shares (RCPS) settled in kind. In 2027, SK Geo Centric may suspend or shut down its 660,000-ton ethylene facility as part of restructuring in Ulsan’s commodity petrochemical sector.
Hwang explained that he raised the target price because he expects the improvement in refining and lubricants earnings to outweigh the reduction in corporate value resulting from the restructuring. Operating free cash flow is projected to reach 450 billion won in 2026 and 150 billion won in 2027, marking a return to the black for the first time in five years. Consolidated net debt is expected to decline from 29 trillion won in 2024 to 18 trillion won in 2027.
[email protected] Hee-sun Kim Reporter