SK Securities has maintained a "buy" rating on SK IE Technology (SKIET), a separator manufacturer listed on the KOSPI, while slashing its target price by 35.8% from 33,500 won to 21,500 won. At the current share price of 13,380 won, that still implies upside of 60.7%.
The downgrade reflects a bruising set of second-quarter results and the financial fallout from a sweeping reorganisation of the company's production footprint. Revenue for the April-to-June quarter fell 52% year on year to 39.5bn won, and operating losses widened to 63.5bn won. Shipment volumes did edge up 10% from the previous quarter to 59m square metres, driven by customers running down excess inventories and stocking up ahead of a change in supply sourcing.
What truly alarmed investors, however, was the net loss figure. SKIET recorded a net loss of 1.3tn won in the second quarter, the result of booking a roughly 600bn won disposal loss from the sale of its Chinese subsidiary alongside approximately 860bn won in asset impairment charges, all in a single reporting period. The debt-to-equity ratio surged from 68% at the end of the first quarter to 152% by the end of the second.
Even so, a ratio of 152% remains relatively modest within the battered battery-materials sector. According to SK Securities data for the first quarter of 2026, the debt-to-equity ratios at other major players stand considerably higher: L&F at 398%, Solus Advanced Materials at 157%, EcoPro BM at 147%, and LG Energy Solution at 140%. SKIET's position, formerly among the most conservatively geared in the industry, has now shifted to the middle of the pack after a single quarter of exceptional charges.
A more telling measure of stress is the company's inventory turnover. SKIET's days inventory outstanding stands at 772 days—the longest among battery separator and materials producers. Its inventory-to-revenue ratio has reached 200%, the highest in the sector. The figures reveal a company sitting on a vast stock of unsold goods even as sales have collapsed; until demand recovers, that inventory overhang will continue to weigh on cash flows.
SKIET's response is to consolidate all global production at its facility in Poland, abandoning its other manufacturing sites. Its Chinese factory has already been sold, and its domestic plant in Jeungpyeong is scheduled to cease commercial operations before the year is out. Management expects the restructuring to cut annual fixed costs by 30%, while the reduction in total capacity should also lower the volume needed to break even.
The concern is timing. The start-up of Phase 2 of the Polish facility has been pushed back again, and is now not expected until the first half of 2027. Phases 3 and 4 are contingent on securing new customer orders, meaning that without fresh contracts, additional capacity may never be brought online. SK Securities forecasts an operating loss of 62.2bn won for the third quarter—broadly similar to the second—and a full-year operating loss of 244.1bn won.
The revised target price was derived by applying a price-to-book ratio of 0.74 times—the two-year historical average—to the projected book value per share of 29,173 won for 2026. SKIET's current price-to-book ratio is around 0.5 times, meaning the stock trades at a steep discount even to its liquidation value. That discount reflects deep market scepticism about when, if ever, the company will return to profitability.
The erosion of analyst confidence has been steady. The target price stood at 54,000 won in November 2024, was cut to 39,500 won in February 2025, trimmed again to 33,500 won in January of this year, and has now fallen to 21,500 won. Over two years, the target has been reduced by nearly 60%. The share price tells a similar story: at its current level, SKIET trades at less than half its 52-week high of 34,300 won.
There are reasons for cautious optimism. Tightening environmental regulations in Europe and the enforcement of Foreign Entity of Concern (FEOC) rules in the United States—which restrict the use of battery components linked to certain Chinese entities—are generating growing interest in non-Chinese battery materials. SKIET's Polish operations place it well to serve European car manufacturers seeking to diversify their supply chains. The share of revenue derived from Europe already climbed from 29% in the first quarter to 38% in the second.
Translating that interest into orders is the crucial next step. Phases 3 and 4 of the Polish plant are explicitly tied to new contract wins, so the absence of a meaningful order announcement in the second half of the year would cast serious doubt on whether the restructuring can deliver. SK Securities is explicit on this point, noting that "the success of the restructuring depends on whether new orders become visible in the second half." The company's status as a subsidiary of a large conglomerate—SK Innovation and one other shareholder together hold 53.35%—provides some financial backstop, but as long as operating cash flows remain negative, the balance sheet will continue to deteriorate.