At a Glance
Battery foil has entered a phase where utilization rates matter more than price. SK Securities' decision to initiate coverage on SKC with a target price of 104,000 won isn't simply a bump in expectations — it reflects a view that the loss-absorbing phase at the company's Malaysian plant may be coming to an end.
In Lee Do-yun's framework, the sequence is clear: demand recovers, plant utilization rises, and as the fixed-cost burden eases, margins follow. The next hurdle for SKC's share price is whether the narrative of a supplier-favorable market for battery foil is actually confirmed by real shipment volumes and earnings.
Why It Matters Now
The key figure in this news is 104,000 won. Given that SKC's previous closing price was in the high 70,000-won range, the brokerage sees considerable upside. However, a target price is not a conclusion but a bundle of assumptions — and at the center of those assumptions are a rising utilization rate at the Malaysian plant and the possibility of turning profitable by 2027.
Battery foil is a material used in the anode current collector of secondary (rechargeable) batteries. While it isn't the largest cost item in a battery, quality defects translate directly into yield and safety issues for battery cell makers. As a result, foil producers face pricing pressure during periods of oversupply, but regain negotiating power once qualified supply becomes scarce. This is the backdrop for SK Securities' comment about the market entering an early stage of supplier-favorable conditions.
The Malaysian plant represents both the cost and the growth side of the investment case for SKC. At a new facility, depreciation and labor costs hit the books early, while revenue lags behind, depending on customer qualification and the pace of volume ramp-up. When utilization is low, losses widen; when it rises, the same equipment generates more revenue and per-unit fixed costs fall. The 2027 breakeven target is less a question about the industry recovering and more about how quickly the plant normalizes.
Frequently Asked Questions
- Why did SKC's target price top 100,000 won? SK Securities initiated coverage on SKC with a target price of 104,000 won, reflecting the view that the battery foil market is entering an early stage of supplier-favorable conditions, and that a rising utilization rate at the Malaysian plant could enable a return to profitability by 2027.
- What does a supplier-favorable battery foil market mean? It means that pricing power shifts to producers when only a limited number of companies can reliably deliver the quality and volume battery makers need. Customer qualification, quality consistency, and mass-production yield become more important than simply expanding capacity.
- Why does a 2027 return to profitability matter? SKC's battery foil business has long had its earnings weighed down by growth-stage facility investment. A shift to profit would signal that expanding scale has finally outpaced cost burdens, which could justify narrowing the valuation discount.
- Should investors expect an immediate earnings improvement? Not yet — it remains conditional. Rising plant utilization needs to translate into actual shipment growth, and both selling prices and cost trends need to hold up at the same time. The share price may move first, but confirmation in earnings tends to come later.
Related Stocks and Sector Impact
- SKC. The direct subject of this news. The 104,000-won target price and hopes for a turnaround in the battery foil business form the basis for a valuation recovery. The key variable is the utilization rate at the Malaysian plant.
- Lotte Energy Materials. A domestic battery foil competitor that shares the same industry read-through. If battery foil comes to be seen as a supplier-favorable market, attention will also grow toward peers' pricing power and the quality of their order books.
- Solus Advanced Materials. A materials company with its own battery foil business. That said, any sector-wide re-rating is likely to play out differently for each company depending on customer qualification, production efficiency, and financial burden.
- Secondary battery materials sector. This is a phase where supply-demand balance for each material matters more than the recovery in battery cell demand itself. Unlike price-sensitive materials such as cathode materials, improving utilization rates for battery foil can create an inflection point in earnings.
Investment Considerations
- The target price is a conditional figure. The 104,000-won target assumes both normalization at the Malaysian plant and an improvement in the battery foil market. If the recovery in utilization is delayed, the assumption of a 2027 return to profitability would also come into question.
- A supplier-favorable market doesn't automatically mean high margins. The speed at which improved pricing feeds through to earnings can vary depending on long-term supply contract structures with customers, raw material prices, and the exchange rate.
- The secondary battery value chain still needs demand to be validated. If the slowdown in EV sales drags on, the recovery in shipments for materials companies will also be delayed. SKC's rebound thesis is more sensitive to its own plant's utilization rate than to the broader industry cycle.
- Financial burden should be watched alongside the story. Capacity-expansion investment is a cost incurred for future volume. Until profitability is achieved, cash flow and debt burden could limit the stock's upside momentum.
Overall Outlook
The investment case for SKC's battery foil business isn't about hopes for a bottom. It hinges on whether the Malaysian plant runs at a level sufficient to absorb fixed costs, and whether the supplier-favorable read on the market is confirmed through actual selling prices and order terms. If that combination holds, the prospect of a 2027 return to profitability becomes grounds for re-establishing the stock's valuation multiple.
The downside scenario is equally clear. If EV demand recovers later than expected, or if customer qualification and volume allocation are delayed, utilization won't show up in the numbers. The next things to watch are quarterly battery foil shipment volumes, the Malaysian plant's utilization rate, and the pace of approach toward breakeven. SKC's share price is likely to respond more to the plant's actual throughput than to the narrative around it.
SKC by the Numbers: Real-Time Data
SKC's most recent closing price was 80,100 won (+2.56% versus the previous day), and the signal combining foreign investor/institutional investor supply-demand (order flow) with news and momentum reads 🟢 Buy-leaning. Foreign investors, institutional investors, and momentum are all positive, making this a stock worth watching.
- ▲ Dual buying — foreign investors +100 million won and institutional investors +3.1 billion won, buying in tandem
※ Price and foreign/institutional investor supply-demand (order flow) data are provided by Korea Investment & Securities (KIS) and reflect figures as of publication.
This article is automatically summarized and analyzed content based on the original news report. View original (Maeil Business Newspaper Securities)
