Financials
Financials — What the Numbers Say
1. Financials in One Page
SKC is a ₩1.84 trillion specialty-materials conglomerate that is half-finished with a strategic transformation from legacy chemicals/PET-film into copper foil for batteries (SK nexilis), semiconductor test sockets (ISC), and glass substrate (Absolics). The numbers tell a stark story: revenue has held flat around ₩1.7-1.8 trillion since FY2023, but operating losses widened every year — from ₩-214 bn (FY23) to ₩-277 bn (FY24) to ₩-305 bn (FY25), and net loss ballooned to ₩-719 bn in FY25. EBITDA was negative for eleven straight quarters until Q1 FY2026 finally posted +₩10 bn — the first "signal flare" of recovery. The balance sheet is heavily levered: interest-bearing debt sits near ₩3.7 trillion against parent equity that has shrunk from ₩2.0 tn (FY21) to ₩832 bn (FY25) — a -58% erosion. Liquidity tightened to a sub-1.0 current ratio in FY24, prompting an asset rebalancing programme of ₩893 bn in 2025 plus a fresh rights offering listing 8 Jun 2026. At ₩159,900/share the market is paying ~7.3× book and ~3.3× sales for a company losing ₩-505 bn in net cash NPV every twelve months. Consensus target sits at ₩105,864 (UNDERPERFORM, 9 analysts). The single financial metric that matters now is quarterly EBITDA trajectory: Q1 FY26's swing to positive must be sustained for two more quarters before the equity story has any underwriting basis.
FY2025 Revenue (₩ bn)
FY2025 Operating Loss (₩ bn)
FY2025 EBITDA (₩ bn)
FY2025 Net Loss (₩ bn)
Interest-Bearing Debt (₩ bn)
Parent Equity (₩ bn)
Market Cap (₩ bn)
Price (₩, May-08-2026)
The single financial fact a reader must internalise: SKC has been free-cash-flow negative for three years, lost ₩-1.5 trillion of cumulative net income in FY23-FY25, and parent equity has fallen 58% from peak. The Q1 FY2026 swing to a tiny positive EBITDA (₩10 bn) is the first hopeful data point but does not yet validate the transformation thesis.
How to read the scoring metrics in this report. SKC's financial data is published only via Korean DART filings; many third-party scoring metrics (Quality Score, Fair Value, Altman Z, Piotroski F, Beneish M) are not available in the data set. We rely on directly computed margins, leverage ratios, and segment economics throughout.
2. Revenue, Margins, and Earnings Power
SKC's reported revenue base has been completely reshaped twice. Industrial Materials (PET film) was divested in 2022; SK enpulse CMP/blank mask assets were divested in 2025. Continuing-operations restatements mean the revenue line below is comparable from FY2022 onward but apples-to-oranges versus FY20-21. We show the full series for context, then focus on FY22+.
What the chart actually says. FY2021 was a peak (PG/SM commodity-chemical super-cycle plus film business intact). The 2022 divestiture removed a large profit pool, and the new portfolio has not yet replaced the lost economics. Operating margin has held in the -14% to -17% band for three years — i.e., the loss is structural, not cyclical. Net margin is materially worse than operating margin (-39% in FY25) because of equity-method losses (mostly Absolics ramp-up) and goodwill/intangible write-downs.
Recent quarterly trajectory (the story that matters now)
What changed in Q1 FY2026. Revenue +13.4% YoY. Operating loss narrowed to ₩-29 bn from ₩-108 bn in 4Q25. Crucially, all three operating segments delivered better numbers: copper foil (SK nexilis) loss narrowed (Malaysia plant standalone EBITDA turned black), semi-test (ISC) put up record ₩68.3 bn revenue at 35% OP margin, and chemicals (SK picglobal) flipped to a +₩9.6 bn operating profit on PG tightness. Q4 FY2025 was inflated by one-time write-downs, so 4Q-to-1Q reads larger than the underlying improvement — but the trend across all three legs is positive for the first time in two years.
3. Cash Flow and Earnings Quality
SKC does not publish a full cash-flow statement in its English disclosures (the audited statement is in the Korean DART business report). What we can observe directly is the end-of-period cash balance and EBITDA, which is enough to answer the most important question for any loss-making transformation story: Is the cash balance compatible with the burn rate?
Free cash flow = cash from operations minus capital expenditure. It is the cash a business actually keeps after running and reinvesting. For loss-making companies, FCF is what determines whether they survive without dilution.
The 2025 cash bounce is not from operations. End-FY2024 cash was ₩404 bn; end-FY2025 cash was ₩1,046 bn. EBITDA in FY2025 was ₩-115 bn — i.e., operations consumed cash. The ₩+642 bn cash gain was overwhelmingly financing plus asset rebalancing:
| Source | Amount (₩ bn) | Notes |
|---|---|---|
| CMP Pad divestiture | 335 | SK enpulse CMP-pad business sold |
| FCCL divestiture | 95 | Flexible copper-clad laminate |
| Exchangeable bond issuance | 385 | EB on ISC shares |
| Blank Mask divestiture | 68 | SK enpulse blank-mask business |
| CMP Slurry divestiture | 11 | SK enpulse slurry assets |
| Total 2025 asset rebalancing | 893 | Per company disclosure |
| Plus financing (rights offering announced) | TBC | New shares list 8 Jun 2026 |
Earnings quality verdict. Reported net income is materially worse than operating income — the gap is ~₩400-500 bn per year — driven by:
- Equity-method losses from Absolics (glass substrate JV in Covington, GA): roughly ₩-70 to ₩-80 bn/year of share of associate losses while it ramps.
- Asset impairments on disposed and underperforming legacy assets.
- Interest expense on ~₩3.7 tn of gross debt: net non-operating items were ₩-396 bn in FY25.
- Non-controlling interest dynamics: Total net loss ₩-719 bn vs parent share ₩-734 bn — losses attributable to minorities are smaller than total losses, meaning the parent (and public shareholders) bear a disproportionate share of the consolidated red ink.
EBITDA is "less bad" than operating income because depreciation runs ~₩190 bn/year on a ~₩3.2 tn tangible asset base. That depreciation is a real cash cost replacement for an asset-heavy commodity business — investors should not treat the gap as paper losses.
Earnings quality red flag. The parent (public shareholders) absorbed ₩-734 bn of FY25 net loss while consolidated loss was ₩-719 bn. That divergence — combined with the ₩1,193 bn non-controlling-interest balance (larger than parent equity) — signals that strategic JVs (Absolics, SK leaveo) are funded with outside partner capital but the losses still flow through SKC's reported P&L. Read ROE on parent equity, not consolidated equity.
4. Balance Sheet and Financial Resilience
The balance-sheet question is binary: can SKC fund the next 18-24 months of cash burn while the transformation matures?
What the balance sheet shows.
- Parent equity has eroded by 54% in four years (₩2,001 bn → ₩832 bn). Three more years of FY24-25-style losses would wipe it out.
- Total liabilities-to-assets has crept to 70% by FY25 vs 63% in FY21. The book is mechanically de-equitising.
- FY24 current ratio of 0.69 was the alarm bell — short-term liabilities of ₩2,211 bn vs current assets of ₩1,520 bn implied a refinancing requirement and triggered the 2025 asset-disposal programme.
- FY25 cash of ₩1,046 bn looks healthy but is largely the recycled disposal proceeds and EB issuance; net debt is still ~₩2,633 bn.
- Goodwill + intangibles of ₩1,326 bn (16% of assets) are concentrated in the ISC acquisition (2023, ~₩1.4 tn) and historical battery-materials goodwill — a future operating-loss driver if write-downs continue.
Refinancing/funding actions in the past 12 months:
- 2025 asset rebalancing of ₩893 bn (SK enpulse CMP/blank mask/slurry, FCCL, EB on ISC).
- ₩310 bn equity-equivalent funding from Korea Investment PE and others (announced May 2025).
- $40 M IFC strategic investment in SK leaveo (PBAT, Vietnam).
- $40 M CHIPS Act subsidy for Absolics glass-substrate plant (Covington, GA).
- Rights offering announced Q1 FY2026; new shares listing 8 Jun 2026 (size unspecified in English disclosures — material-dilution risk).
- Cancelled cathode-material investment plan in Dec 2025 — explicit capex discipline.
Resilience verdict — fragile, but with active management. SKC is not in immediate distress: it has ₩1.05 tn of cash, parental support from SK Group, multiple monetisable subsidiaries (notably the listed ISC stake), and a credible asset-rebalancing track record. But equity-cushion erosion is real, the rights offering will dilute existing shareholders (size yet to be disclosed), and the company has no investment-grade local credit rating publicly available in our data. Two more years of FY25-magnitude losses without further capital injection would be untenable.
5. Returns, Reinvestment, and Capital Allocation
ROIC is meaningfully negative. With operating income of ₩-305 bn and an invested capital base of roughly ₩6.0 tn (parent equity + interest-bearing debt - cash), pre-tax ROIC is ~-5%, against an estimated cost of capital of 8-10% for a Korean specialty-chemicals company. Per ₩1 of capital deployed, SKC is destroying ₩0.13-0.15 of value annually at current run-rate. This is the central financial fact about the business.
Capital allocation under the current management
Notes on the capital-allocation chart. Capex/acquisition figures are management-disclosed approximations from earnings-release narratives because the full English cash-flow statement is not published. Buybacks and dividends are zero on continuing operations: SKC stopped paying dividends in 2022 after the divestitures, and there are no buyback programmes announced.
Share-count dynamics. Common shares outstanding ≈ 37.9 M (KRW 189.3 bn capital stock at ₩5,000 par). With a rights offering scheduled to list 8 Jun 2026, share count is set to rise — quantum not yet disclosed in English filings; investors should expect 5-15% dilution as a working assumption pending the prospectus.
Capital-allocation verdict. Management's allocation pattern in 2025 is defensive, not offensive: divest non-core (CMP, blank mask, FCCL), issue exchangeable bonds (deferred dilution), prepare a rights offering. The single offensive bet — Absolics glass substrate, ~$1.6bn cumulative investment — has yet to generate revenue. This is the textbook pattern of a company financing a 5-7 year structural pivot rather than a value-compounder.
6. Segment and Unit Economics
The aggregate numbers hide one critical fact: only one of SKC's four segments is profitable.
Reading the segment economics
1. Chemical (SK picglobal) — 59% of revenue, structurally loss-making. PG/styrene monomer is a commodity-spread business in a chronic Asian-overcapacity downcycle. FY25 OP margin: -6.6%. Q1 FY26 saw a tiny +₩9.6 bn profit on PG tightness from Middle-East geopolitical disruption — likely transient. This is the legacy drag that the divestiture programme has not yet fixed.
2. EV battery material (SK nexilis copper foil) — 28% of revenue, ₩-175 bn loss. Loss-making at -34% OP margin in FY25 due to under-utilisation in Korea/Malaysia/Poland plants while volumes ramp. Q1 FY26 showed encouraging signs: ESS-segment volumes +390% YoY, North-American volumes +403% YoY, Malaysia plant standalone EBITDA positive. This is the segment investors are paying for in the current valuation.
3. Semi material (ISC test sockets) — 12% of revenue, 27% OP margin, +₩60 bn profit**. The crown jewel. Acquired in 2023 for ~₩1.4 tn. AI/HBM tester demand drove +35% YoY revenue growth in FY25 with expanding margins on high-end SLT (System-Level-Test) socket mix. This is the only segment generating returns above cost of capital**. Management guides 20%+ revenue growth in 2026 with strategic capex in Vietnam.
4. New business (Absolics glass substrate + SK leaveo PBAT) — virtually no revenue, ₩-50 bn loss. Pre-revenue, capital-consumptive. Absolics has a Covington, GA plant operational with $40M CHIPS Act support but qualification cycles for high-end semiconductor packaging are 18-36 months. PBAT plant in Vietnam now mechanically complete with $40M IFC investment.
The investment thesis in one sentence: SKC is a ₩6.1 tn market-cap bet that ISC (currently ~10% of revenue, the only profitable leg) plus a recovering SK nexilis (currently bleeding) plus an unproven Absolics can collectively replace SK picglobal's structural losses and deliver group-level operating profit before the equity cushion runs out. Q1 FY2026's positive EBITDA print is the first signal that segment economics may be turning; we need 2-3 more quarters of confirmation.
7. Valuation and Market Expectations
Because SKC is loss-making, traditional P/E and EV/EBITDA are not meaningful. The valuation has to be read through price/sales and price/book plus a scenario analysis.
Market Cap (₩ bn)
Enterprise Value (₩ bn)
P/S (TTM)
P/B (parent)
What the price implies
At ₩159,900, the market is paying 7.3× book on parent equity — a premium that requires belief that parent equity grows via Absolics commercialisation, ISC contribution, and SK nexilis turnaround, not that today's segment economics hold. On a P/S basis, 3.3× sales is at the top end of SKC's own 5-year range (1.5-3.3×).
Bear / Base / Bull scenario pegs (illustrative, KRW)
Consensus signal. Per third-party aggregators: 9 sell-side analysts cover SKC with a mean UNDERPERFORM rating and an average 12-month target of ₩105,864 — implying -34% downside from spot. Nomura downgraded SKC to "Reduce" in April 2025 with target ₩90,000 (from ₩150,000). Stockopedia's consensus is ₩112,822. The bull case in the market is being expressed mostly through retail KOSPI flows rather than institutional underwriting.
Valuation verdict — expensive relative to delivered economics, optionality-priced. P/B 7.3× and P/S 3.3× imply the market is paying a premium for the transformation outcome, not the current cash flows. With consensus at ₩105,864 (-34% from spot), the implied institutional view is that the rerating has run ahead of fundamentals. Underwriting the long requires belief in Absolics commercialisation timing and FY26-27 EBITDA inflection — both unproven.
8. Peer Financial Comparison
The Korean peer set spans copper-foil battery materials (Lotte Energy Materials, Solus Advanced Materials), semiconductor consumables (Hansol Chemical, LEENO Industrial), and basic chemicals (Lotte Chemical). Note: peer financial detail is partial — full reconciled three-year line items are pending in our dataset for several names.
Peer-comparison observation. SKC's EV/Sales of 3.3× sits above mature commodity peers (Lotte Chemical 0.6×, Solus 3.0×) and below the semi-test specialists (LEENO Industrial 21.9×, Hansol Chemical 3.6×). Read mechanically, SKC is being priced as if its future revenue mix will look more like Hansol Chemical / LEENO (semiconductor consumables/sockets) than Lotte Chemical / Solus (commodity battery materials). That premium is not unreasonable as a forward bet on the ISC + Absolics economics, but it bakes in successful execution.
LEENO Industrial — the closest pure-play comparable for ISC's test-socket business — trades at 39× EV/EBITDA. If ISC's standalone FY25 EBITDA is roughly ₩80 bn (60.1 OP + ~20 D&A), implied standalone enterprise value at LEENO multiples ≈ ₩3.1 tn — i.e., ISC alone could justify ~50% of SKC's current EV. That is the sum-of-the-parts argument supporting the current price. The other ₩5.5 tn of SKC EV must be carried by SK nexilis copper foil + chemicals + Absolics + balance-sheet deductions.
9. What to Watch in the Financials
Closing read on the financials
What the numbers confirm. SKC is mid-transformation, value-destroying at the consolidated level (-90% ROE on parent equity in FY25), but with a clearly identifiable profitable segment (ISC) and a credible defensive capital programme (₩893 bn 2025 disposals + rights offering). The Q1 FY2026 EBITDA inflection is the first hard data point that could validate the thesis.
What they contradict. The ₩1.05 tn cash balance at FY25 looks reassuring on paper but cannot be read as operating strength — it is recycled disposal proceeds. The market's 7.3× P/B is inconsistent with three years of deepening losses unless one underwrites the SOTP optionality of ISC + Absolics.
The first financial metric to watch is the 2Q FY2026 EBITDA print — does the +₩10 bn turn into +₩30-40 bn or revert to negative? A second consecutive positive print would be the strongest confirmation that the structural losses are giving way to operating leverage; a reversion would refocus the market on the rights-offering quantum and on equity-cushion erosion.
Figures in this report are presented in Korean Won (₩) at native reporting values. SKC's full audited statements are filed in Korean on DART (Korea's electronic disclosure platform); English-language disclosures are limited to Sustainability Reports and quarterly earnings-release decks. Where cash-flow line items are unavailable in English, we have noted estimates derived from balance-sheet movements and management commentary.