SK Innovation Co. Ltd.

We expect a global recession in 2020 owing to the rapid spread of COVID-19, with global GDP contracting by 3.8% in the full year. There is a high degree of uncertainty about the containment of the coronavirus pandemic, in our view. We expect SKI's EBITDA to be negative Korean won (KRW) 0.3 billion-KRW0.8 billion for 2020, from an already low base of KRW2.5 trillion in 2019. However, we expect earnings to recover to KRW2.2 trillion-KRW2.7 trillion in 2021 and KRW2.7 trillion-KRW3.2 trillion in 2022, largely driven by the absence of inventory-related losses and a modest rebound in business conditions. SKI's diversification to the rapidly growing electric vehicle (EV) battery business could reduce cyclicality of its earnings. However, the meaningful earning

...Substantial operating losses likely in 2020 due to drop in crude oil prices, weak demand, and COVID-19. The significant decline in oil prices in 2020 will lead to sizable inventory-related losses for the refining industry, including SK Innovation Co. Ltd. (SKI). In past cycles, low oil prices boosted demand and improved refining spreads in the following quarters. However, the currently tough macroeconomic conditions are likely to limit the positive impact of lower prices. The Singapore oil refining margin weakened further and averaged about $0.0 per barrel (bbl) in the first nine months of 2020, as the pandemic aggravated the already weak demand for refining products. In comparison, the average margin benchmark was US$3.0-US$3.5 per bbl in 2019, down by about 40% from 2018 and below the 10-year average of US$5.0-US$6.0 per bbl due to weakened market conditions on the back of a volatile global economy. We expect a global recession in 2020 owing to the rapid spread of COVID-19, with global...

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