The average target price of 034730.KS is 206115 and suggests 48% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 230000.0. This translates into 65% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 160000.0. This suggests 15% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

SK Inc. focuses on operating in energy, chemicals, information and communications, biopharmaceutical, mobility, materials, logistics, and service business areas. The company was formerly known as SK Holdings Co., Ltd and changed its name to SK Inc. in March 2021. SK Inc. was founded in 1991 and is headquartered in Seoul, South Korea.

Korea

SK Inc.

Technology

The company has a track record of regular dividend payments. It has paid dividends in each of the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are somewhat mixed. In the past 12 months, the dividend yield has been outstanding and can be rated excellent compared to its peers. At the same time, the average five-year yield has been significantly higher and exceeded most of its peers. On average, the company pays dividends twice a year. 

034730.KS reported revenue of KRW 125 091 769mn in the last 12 months, down 5% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 27% from FY23 to KRW -25 846.78. Market expects EPS to reach KRW 13 131.40 in FY25.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Within the past six months, its performance has trailed this peer group's by 5ppts and its growth accelerated by 9ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is neither favourable nor unfavourable.

The company has reported modest EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 9.7% in the last 12 months, a decline from 11.0% in FY23. 

Historically, 034730.KS has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -1.1%, a growth from -1.5% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to -0.7% in the last 12 months, an increase from -1.0% in FY23. The market analysts predict that RoA will be 1.6% in FY24, again weaker than its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to -1.0%, below the peers. The consensus estimate for FY24 for RoCE is -6.7%, again behind the peers. 

SK Inc. reported a return on equity (RoE) of -6.2% in the last 12 months, up from -9.2% in FY23. The market consensus projects an RoE of 16.7% in FY24, again behind its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.2 in the past several years. This ratio implies a weak shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

034730.KS has above average trading liquidity. The average private investor can sell his common position in the stock almost immediately. Liquidity may be unstable and remains mildly favourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. 

No other major risks have been identified.

The risk of default is high. Among the negative credit factors, we point to slow historical revenue growth, negligible return on capital, poor working capital management, and weak debt servicing capacity. We note strong positions in its industry, among the positive credit factors. 

In highly turbulent market conditions, 034730.KS is not overly volatile. In other words, the stock will fall less than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be low. 

In normal market circumstances, 034730.KS is as volatile as an index. Put differently, without outstanding market volatility or shocking company news, the stock's price will move with the index. The stock's losses on its worst days (less than 1-5% of the time) will range from very low to minimal. 

From both historical and forecast perspectives, the stock is considerably underpriced compared to similar stocks. Specifically, the stock is 'cheap' on P/E, undervalued on EV/EBITD. 

SK Inc.

₩ 137400

6

SK Inc.

₩ 137400

6

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

₩ 137400

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