Stronger for Longer; Upgrade to OW

Research evidence excerpt

Stronger for Longer; Upgrade to OW

IdeaM

RiskRisk RewardReward– SK Innovation- SK InnovationCo Ltd (096770.KS)Co Ltd (096770.KS)

Stronger for Longer - OW

PRICE TARGET W150,000 OVERWEIGHT THESIS

back toward traditional energyBase case, sum of the parts. ▪Pivot

Refining, Chem, E&P, SK E&S. Lubricants: 2027e EV/EBITDA multiples of 6.0x for refining, business: SKI is showing signs of reallocating

4x for chem, 5x for E&P, 8x for SK E&S, and 8x for lubricants. These are set with reference focus toward its energy-related businesses,

to global peers' range. particularly refining and LNG businesses,

EV Batteries: Implied value of W3.6trn - 16x 2027e EV/EBITDA, in line with its domestic which are currently benefiting from a more

peers. favorable market backdrop.

IE Technology: Implied value of W0.2trn - 61% stake value at current market cap with 70% ▪Battery-related risks largely priced in:

holdco discount. Structural challenges in the EV battery

business remain, including weak utilization W147,250

and margin pressure. However, we believe

Consensus Price Target Distribution W80,000.00 W200,000.00 these risks, both operational and balance MS PT

sheet-related, are now well flagged.Source: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates for longer refining margin: ▪Stronger

Growing expectation of refining and

lubricant margins remaining stronger for

RISK REWARD CHART longer support the case for further re-rating.

W190,000W190,000(+62.95%)W190,000(+62.95%)(+62.95%)

KRW Consensus Rating Distribution

64% Overweight

160000 24% Equal-weight

W150,000W150,000(+28.64%)W150,000(+28.64%)(+28.64%)

12% Underweight

MS Rating

120000 W116,600W116,600W116,600

Source: Refinitiv, Morgan Stanley Research

Risk Reward Themes

W80,000W80,000(-31.39%)W80,000(-31.39%)(-31.39%)