SK Innovation, a South Korean energy company, held a conference call on June 26th to discuss its paid-in capital increase. The company has been facing challenges such as large-scale expenditures and issues with battery profitability as it transitions to a green business-oriented portfolio.
At the end of the first quarter of this year, SK Innovation’s debt ratio reached 200%, with a net debt of 15.8 trillion won. To address these financial concerns and secure resources for future growth, the company decided to increase its paid-in capital.
SK Innovation has been focusing on attracting investment through its SK On FI investors, with a goal of attracting around 2.8 trillion won of investment. The company is also reviewing asset efficiency in addition to the paid-in capital increase.
The total paid-in capital increase for SK Innovation amounts to 1,177.7 billion won, with 400 billion won allocated for green business purposes. This includes investments in carbon-free energy technology, low-carbon energy production through waste gasification, and carbon capture/storage technology.
Additionally, the company plans to allocate about 420 billion won to strengthen research and development, including the creation of a green campus in the Daejang district of Bucheon. It also intends to use 350 billion won to repay debts.
In terms of shareholder value, SK Innovation aims to improve profitability through its SK On business, reflect the AMPC effect on local production in the US, and improve yields at overseas business sites.
During the conference call, SK Innovation answered several questions regarding its investment plans. The company clarified that the battery-related R&D infrastructure investment is separate from the existing businesses of its affiliates. It also explained that its new hydrogen business focuses on ammonia-related transportation and power generation, while the holding company’s hydrogen business focuses on green and blue hydrogen production and charging.
SK Innovation provided details on its investment related to domestic waste gasification, which involves sorting and crushing municipal solid waste, gasification, fuel synthesis, and synthetic fuel production.
The company also discussed the details of its fund raising for the acquisition of securities by other corporations, including investments in hydrogen and ammonia, domestic waste, and carbon capture, utilization, and storage (CCUS).
When asked about the reduction of net debt through the paid-in capital increase, SK Innovation stated that there would be a significant reduction in net debt, with a cash inflow of more than 1 trillion won. However, the company noted that the net debt reduction in the future is dependent on capital expenditures.
Regarding the decision to pursue a paid-in capital increase despite having funds, SK Innovation explained that most of its cash is in subsidiaries and for investing in their own businesses. The company’s own cash holdings are less than 1 trillion won, and the additional funds will accelerate the transition to a green business.
SK Innovation did not share specific financial soundness targets for 2023 and 2024 but stated that the paid-in capital increase was necessary to secure finance for future growth and prepare for external uncertainties.
The company emphasized that it is promoting asset efficiency in addition to the paid-in capital increase to raise funds. Improving business profitability, including its SK On business, is also expected to contribute to financial soundness.
SK Innovation stated that there are no plans for additional paid-in capital increase in 2023.
Regarding the timing of its IPO, SK On, the company confirmed that there is no change in the timing and that it will take place after 2025 at the earliest. The company’s official order backlog is currently 2,000GWh, and it is expected to increase through collaboration with Hyundai Motor in the US.
When asked about the expected timing of investment, recovery, and revenue recognition for its new business, SK Innovation stated that the timing will vary for each investment case. It is currently difficult to predict the timing of investment recovery as the projects are not fully developed. Sales are expected to occur incrementally between 2025 and 2030.
Addressing concerns about the paid-in capital increase and its impact on shareholder value, SK Innovation acknowledged the worries but emphasized its efforts to enhance corporate value through various shareholder value enhancement measures. The company believes that profitability issues are being resolved and that creating an environment for rapid improvement in profitability will lead to a re-evaluation of its corporate value.
Overall, SK Innovation’s conference call provided insights into its paid-in capital increase and its plans for the future. The company aims to address its financial concerns, accelerate its transition to a green business, and enhance shareholder value through various measures.SK Innovation, a South Korean energy company, held a conference call on June 26th to discuss its paid-in capital increase. The company has been facing challenges such as large-scale expenditures and issues with battery profitability as it transitions to a green business-oriented portfolio.
At the end of the first quarter of this year, SK Innovation’s debt ratio reached 200%, with a net debt of 15.8 trillion won. To address these financial concerns and secure resources for future growth, the company decided to increase its paid-in capital.
SK Innovation has been attracting investors for its SK On FI, aiming to raise approximately 2.8 trillion won in investments. The company also plans to review asset efficiency in addition to the paid-in capital increase.
The total paid-in capital increase amounts to 1,177.7 billion won, with 400 billion won allocated for green business initiatives. This includes technology and business development for carbon-free energy, low-carbon energy production through waste gasification, and technology related to carbon capture and storage.
Additionally, 420 billion won will be used to strengthen research and development, including the creation of a green campus in Bucheon. Another 350 billion won will be used to repay debts.
SK Innovation aims to enhance shareholder value by improving the profitability of SK On, reflecting the AMPC effect on local production in the US, and improving yields at overseas business sites.
During the conference call, several questions were raised regarding the company’s investments and financial targets. SK Innovation clarified that the Bucheon Daejang District Green Campus is aimed at strengthening R&D capabilities in the battery business. The company also explained that its new hydrogen business focuses on ammonia-related transportation and power generation.
Regarding investment in domestic waste gasification, SK Innovation stated that it involves sorting and crushing municipal solid waste, gasification, fuel synthesis, and synthetic fuel production.
The company also addressed concerns about its net debt, stating that there will be a significant reduction after the completion of the paid-in capital increase. However, the future decrease in net debt will depend on the company’s capital expenditures.
When asked about the decision to increase paid-in capital despite having funds, SK Innovation explained that most of the cash is in subsidiaries and for investing in their own businesses. The company’s own cash holdings are less than 1 trillion won, and the additional funds will accelerate the transition to green business.
SK Innovation did not disclose specific financial targets for 2023 and 2024 but stated that the paid-in capital increase was necessary to secure finance for future growth and prepare for external uncertainties.
Regarding the priority among asset sales, borrowings, and bequests, SK Innovation stated that it is promoting asset efficiency to raise funds in addition to the paid-in capital increase. The company believes that improving business profitability, including SK On, will contribute to financial soundness.
SK Innovation clarified that there are no plans for additional paid-in capital increase in 2023.
In terms of the IPO timing for SK On, the company stated that there is no change, and the earliest possible timing for the IPO is after 2025. The company’s official order backlog is currently 2,000GWh, and it is expected to increase through collaboration with Hyundai Motor in the US.
The timing of investment, recovery, and revenue recognition for the new business will vary for each investment case. SK Innovation expects sales to occur incrementally between 2025 and 2030.
Addressing concerns about the paid-in capital increase and shareholder value, SK Innovation acknowledged the worries but emphasized its efforts to enhance corporate value through various shareholder value enhancement measures. The company believes that profitability issues are being resolved and that shareholder value will be re-evaluated.
SK Innovation’s plan to enhance shareholder value includes a stock exchange between SK On and SK Innovation near the time of SK On’s IPO, as well as special dividends related to the sales of old stocks after the IPO. The company is also considering measures such as the cancellation of treasury shares to enhance shareholder value.
Overall, SK Innovation’s paid-in capital increase aims to address its financial challenges, accelerate the transition to green business, and secure resources for future growth. The company is confident that its efforts will enhance shareholder value and improve profitability.
How does SK Innovation plan to enhance shareholder value and address concerns about the impact of paid-in capital increase
And to prepare for external uncertainties. The company also highlighted its focus on asset efficiency and improving business profitability in addition to the paid-in capital increase.
SK Innovation confirmed that there are no plans for another paid-in capital increase in 2023. The company also provided an update on its IPO plans, stating that it will take place after 2025 at the earliest.
Regarding the expected timing of investment recovery and revenue recognition for its new business, SK Innovation noted that it will vary for each investment case. Sales are expected to occur between 2025 and 2030.
Addressing concerns about the impact of the paid-in capital increase on shareholder value, SK Innovation acknowledged the worries but emphasized its efforts to enhance corporate value through various measures. The company believes that resolving profitability issues and creating an environment for rapid improvement will lead to a re-evaluation of its corporate value.
Overall, SK Innovation’s conference call provided insights into its plans to address financial concerns, accelerate its transition to a green business, and enhance shareholder value. The company is taking steps to secure resources for future growth and to position itself as a leader in the energy industry.
I am excited to see SK Innovation taking steps towards green business transformation and future growth. This conference call discussing the paid-in capital increase is a positive sign of their commitment to sustainable practices and innovation. Looking forward to witnessing the company’s progress in driving a greener future.