SK Innovation shares attract investors, foreign buyers

South Korea’s leading energy and petrochemical company SK Innovation said it has seen a rise in institutional and foreign buying, on the back of a shift in its profit model and business structure.

Institutional investors remained net purchasers from Sept. 3 to Oct. 2, except for two trading days, trading some 689,663 units of stocks during the period, according to the firm.

The percentage of foreign buying also recovered to the 40 percent range on Oct. 2. As of Oct. 7, the amount purchased by foreign investors marked 174,140 shares over the five recent trading days. 

The proportion of foreign buying is considered a significant indicator in assessing the quality of a company’s shares. Thirteen of the nation’s top 20 companies currently have foreign investor ownership of 40 percent or higher.

SK Innovation is expected to see a further rise in institutional and foreign buying in the upcoming weeks, buoyed by a recent uptrend in the energy and chemical industries. 

The company’s stock price hit a 52-week record high on Oct. 2 at 223,000 won ($197).

The steady increase was also attributable to SK Innovation’s differentiated portfolio based on “deep change,” a term referring to a shift in the company’s profit model and business structure, according to officials.

Stock market observers echoed the view, adding that the business performances of local oil refineries might be further adjusted upward in the wake of a global oil price hike.

“SK Innovation’s chemical business is expected to record an operating profit of 317 billion won in the third quarter this year, considering that its para-xylene production capacity is likely to remain in good condition until the first half of 2019,” said Hyundai Motor Securities researcher Kang Dong-jin. 

SK Innovation is currently No. 1 in the nation and No. 6 in the world in terms of production capacity of para-xylene, a chemical essential in the process of manufacturing PET plastic bottles and polyester fiber.

In addition, the Korean energy company is expected to benefit from the IMO 2020 regulation -- a global rule that takes effect starting January 2020 to limit sulfur content in all marine fuels.

“The annual profits of local oil-related sectors will increase by 200 billion won or more,” said Roh Woo-ho, an analyst at Meritz Securities.

Ongoing rumors that the company plans to build a new battery production plant in the United States have also contributed to boosting its stock price, a favorable mood that is likely to last until the first half of next year, observers noted.

(ddd@heraldcorp.com)