SK On Co. Ltd. (SKBTAM)
South Korea / EV batteries
Active
Issuer Summary
SK On is an unlisted EV and ESS battery manufacturer under SK Group / SK Innovation. Its production networks in the United States, Europe, and Asia, Nissan contract, BESS expansion, and integration with SK On Trading International / SK Enmove make it an important part of the non-Chinese battery supply chain. SK On operating credit is supported by group support, business base, capital policy, and restructuring, but constrained by battery business operating losses, BlueOval SK impairments, subsidy dependence, capex, and limited standalone disclosure. SKBTAM / SKBA KB-guaranteed notes should be analysed separately from SK On operating credit and assessed around Kookmin Bank guarantee risk. For SK On operating credit, ongoing monitoring is required for loss reduction, profit excluding subsidies, FCF, capital reinforcement and asset disposals, and rating actions.
At present, SK On's operating credit should be viewed as a recovering high-beta battery credit for which imminent payment default is not the main scenario due to strategic importance and group support, but for which investment-grade-type stability cannot be confirmed in standalone earnings power and leverage. Capital reinforcement from 2025, asset optimisation, the SK Enmove integration, and ESS expansion are improvement factors. However, until actual results are confirmed, the credit view remains neutral to slightly biased toward downside pressure because of battery business operating losses, BlueOval SK impairments, subsidy dependence, and customer-demand volatility.
This view is supported by SK On's status as a core electrification asset within SK Group, with production networks in the United States, Europe, and Asia, the Nissan contract, BESS expansion, SKBA, SK On Trading International, and the SK Enmove integration. SK Innovation has also shown a willingness to support the battery business through dividend suspension, capital reinforcement, FI interest buyout, non-core asset disposals, and the SK Enmove integration.
The constraints are clear. The battery business recorded an operating loss of KRW931.9 billion in 2025 and an operating loss of KRW349.2 billion in 1Q 2026. In 2025, SK On also recognised approximately KRW4.2 trillion of impairments including the BlueOval SK restructuring. This shows that the long-term growth theme of the battery business does not guarantee short-term earnings power or asset value. The group reported consolidated operating profit of KRW2.16 trillion in 1Q 2026, but this was heavily driven by refining inventory gains and lag effects, and does not directly improve SK On's operating credit.
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