Strong 2Q26 earnings may not be sustainable Quick Note

Research evidence excerpt

Strong 2Q26 earnings may not be sustainable Quick Note

Global Markets Research

SK Innovation 096770.KS 096770 KS 30 July 2026

EQUITY: OIL & GAS/CHEMICALS

RatingStrong 2Q26 earnings may not be sustainable Remains Neutral

Target price KRW 118,000 RemainsQuick Note

Closing priceSK Innovation (SKI) on 30 July reported 2Q26 revenue of KRW29.2tn (+20.0% q-q, 30 July 2026 KRW 116,600

+49.9% y-y), operating profit of KRW3.5tn (+61% q-q and turned to profit y-y) and net

profit of KRW73.5bn (-92% q-q and turned to profit y-y). Revenue and operating profit

were above the recent one-month Bloomberg consensus estimates by 6% and 121%, Research Analysts

respectively. The stronger-than-expected earnings were attributable to the oil refining Asia Energybusiness (exports, and not the domestic business due to the Korean government’s cap of

Cindy Park - NFIKdomestically sold petroleum prices) as Asia GRM rose to USD25.6/bbl in 2Q26 (1Q26 cindy.park@nomura.com

average: USD8.1/bbl, 2025 average: USD4.8bbl), and its lubricant business. On a +822 3783 2324

consolidated basis, SKI recorded an inventory valuation gain of KRW1.2tn (KRW170bn+

Dongmin Lee - NFIKq-q), which is 34% of 2Q26 operating profit. Regarding non-operating losses, SKI incurred dongmin.lee@nomura.com

a price return swap related valuation loss of KRW1.2tn – related to the valuation decline of +822 3783 2338

underlying assets, SKIET (361610 KS, Not rated) and SK On (unlisted).

Key highlights from the 2Q26 earnings call are:

• SKI recorded strong earnings in its lubricant business, driven by solid sales from its

Group III base oil and the Middle-East supply disruptions affecting competitors. The

company provided a cautious outlook for 3Q26E, expecting supply disruptions to ease

as the US-Iran conflict de-escalates.