SK Innovation Co. Ltd.

Overview Key strengths Key risks Good market position in Korea's oil refining and chemical industry. EBITDA and cash flow highly exposed to fluctuating oil prices. Large and vertically integrated oil refinery and chemical complex. Aggressive capacity expansion and delays in turnaround of EV battery business. Some diversification with electric vehicle (EV) battery business and specialty chemical products. Free operating cash deficits from significant capital spendings. Following a deterioration in its debt-to-EBITDA ratio to 5.7x in 2023 from 3.3x in 2022, we expect it will remain above 4.0x in 2024 and 2025. The main driver is a recent slowdown in EV battery demand and high capital expenditure exceeding operating cash flow. SKI is investing aggressively in EV battery capacity expansion, most

...SK Innovation Co. Ltd.'s (SKI) debt to EBITDA will remain high over the next two years. Following a deterioration in its debt-to-EBITDA ratio to 5.7x in 2023 from 3.3x in 2022, we expect it will remain above 4.0x in 2024 and 2025. The main driver is a recent slowdown in EV battery demand and high capital expenditure exceeding operating cash flow. SKI is investing aggressively in EV battery capacity expansion, most notably in the U.S., and capital expenditure will likely remain high over 2024-2025, albeit slightly down from in 2023. This should rapidly drive SKI's adjusted debt to KRW29 trillion by 2025 from KRW23 trillion in 2023 and KRW19 trillion in...

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