An exterior view of SK Networks' gas station (SK Networks)
SK Networks shares rose sharply Thursday on anticipations that its decision to divest its energy retailer unit for 1.3 trillion won ($1.1 billion) would improve the balance sheet.
Its shares closed 14.5 percent higher on Kospi bourse compared to the previous session.
Analysts said the price was buoyed by expectations that SK Networks would mitigate its debt burden from its acquisition of AJ Rent A Car in December 2019, carry out a 100 billion won share buyback and overhaul the trading firm’s portfolio.
“After the divestment, we expect the company to focus on financial soundness and its portfolio with growth potential,” IBK Securities analyst Ahn Ji-young wrote in a note, referring to its car rental service to water purifier rental service.
Ahn added that the energy retail business has rather been suffering high volatility by contrast.
This came a day after SK Networks agreed to sell energy retailer unit for cars and asphalt to a consortium made up of Hyundai Oilbank and Koramco REITs Management & Trust by June.
Hyundai Oilbank, a local oil refiner, will obtain the rights to operate some 320 gas stations in Korea, while Koramco will control parts of its real estate assets.
The deal will allow Hyundai Oilbank to vie for the No. 2 spot in terms of the number of gas stations in domestic energy retailer market with GS Caltex, followed by the market leader SK Energy.
SK Networks also unveiled a share buyback plan, which would increase its ownership to nearly 12 percent.
By Son Ji-hyoung (firstname.lastname@example.org