"I hope SKI are innovating diligently" Well, they are just about...

"I hope SKI are innovating diligently"

Well, they are just about to raise a massive war chest that will give them the means to do so!
SK Innovers, SK Lubricants IPO to Wow Company Value

Cash flow of over KRW 1 trillion when listing is completed in May
"Plan to secure venture for next-generation growth investment"

More news articles by SooJin Choi ([email protected]) +

Registration: 2018-04-16 07:06​

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SK Innovation's enterprise value is expected to rise as SK Lubricants, a wholly-owned subsidiary of SK Innovation, will complete an IPO in May.

According to the chemical industry on April 15, when SK Lubricants' IPO process is finalized in May, only cash inflows to SK Innovation through sales to Europe will be at least KRW 1 trillion to KRW 1.2 trillion (pre-tax basis).

On March 3, SK Lubricants filed a securities report to conclude an 8-to-2 resale of new shares and a reshuffle of new shares, and confirmed a total of 12,760,557 common shares.

SK Innovation intends to use the cash generated by the listing of SK Lubricants to enhance its corporate value and secure next-generation growth resources.

Last year, SK Innovation purchased the high-end ethylene-acrylic acid (EAA) and polyvinylidene chloride (PVDC) businesses from the US Dow and decided to build a large-scale EV battery plant in Hungary's Komarong. We have secured business.

SK Lubricants recorded an operating profit of 504.9 billion won last year and achieved a high operating margin of over 14.6%.  The company is highly valued by its steady operating margin and high growth of the high-end lubricant market.

The premium lubricant market is expected to grow at a CAGR of 3.5% from this year to 2022.  SK Lubricants ranked first in the global premium lube oil group III market with 39.3% market share in terms of demand.  The company plans to secure its position as a global leader by utilizing 300 billion won in cash from the market.

SK Innovation's expectations for 2Q earnings improvement and listing of SK Lubricants are also significant.

Yoon Jae-sung, a researcher at Hana Financial Group, said, "In the mid- to long-term, the petroleum business has entered a quiescent period." Refining margins will continue in the year with bottoming in 1Q. "

According to researcher Hwang, Kyu-Won of Yu-Taek Securities, "SK Lubricants has a listed value of KRW5.3 trillion, considering its ability to generate EBITDA of W600bn per year, near-zero financial conditions, and ROE of 20-25% "We can expect to see a revaluation of SK Telecom as a subsidiary, which is much higher than SK Innovation's average ROE of 13%."

In addition, SK Innovation is paying attention to the growth potential of the non-refining business.  Last year, SK Innovation achieved operating profit of more than KRW 2 trillion only in the non-refining business.

SK Innovation said, "SK Lubricants will gain the driving force for additional growth by recognizing its own distinctive competitiveness." With the acquisition of at least KRW 1 trillion worth of investment funds, SK Innovation's corporate value I expect it to rise. "

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