The financial stability of SK디앤디 has become a focal point in the market, especially after its credit rating was maintained at ‘A3’ by Korea Credit Rating. This rating is the same as that of Homeplus, which recently filed for rehabilitation proceedings, adding to the concerns surrounding SK디앤디’s financial health.
Financial Performance and Concerns
In 2024, SK디앤디 experienced a significant increase in operating revenue due to the sale of assets like Myeongdong N Building, Dangsan Station office site, and Chungmuro office shares. Consolidated operating revenue for 2024 reached KRW 870.9 billion, nearly 2.3 times higher than the previous year’s KRW 385.1 billion. However, operating profit dropped significantly to KRW 53.7 billion, just 30% of the previous year’s KRW 177.6 billion, signaling concerns about its profitability.
Market Concerns and the Homeplus Comparison
There are growing concerns that SK디앤디 may be following in the footsteps of Homeplus. However, industry experts point out that the business structures of the two companies are different, and SK디앤디 could benefit from the possibility of group support. As of the end of 2024, SK디앤디’s consolidated debt dependency ratio stands at 52.5%, a level considered unstable. However, the company has successfully reduced its net debt significantly by selling operating assets, a move that has improved its financial position.
Debt Reduction and Financial Flexibility
SK디앤디’s efforts to reduce its debt are evident. By the end of 2024, the company reduced its net debt to KRW 422.3 billion on a separate basis and KRW 521.2 billion on a consolidated basis. This is a significant improvement compared to the end of 2023. Credit rating agencies have evaluated that SK디앤디’s financial flexibility will remain strong if it continues to manage its risks effectively, given its borrowing structure and the external credit rating of its parent group, SK Discovery.
Real Estate Market Risks and Contingent Liabilities
Despite these positive aspects, SK디앤디 faces risks due to its involvement in real estate development. Performance volatility is a significant risk, especially amid the prolonged slump in the real estate market. One of the primary risks is the uncertainty surrounding the profitability of ongoing and planned projects, and the timing of recovery of development profits. Moreover, the company has substantial contingent liabilities, such as obligations related to the Gunpo Station Complex Development and the Icheon Baeksa Logistics Center.
The Role of SK Discovery Group’s Support
Unlike Homeplus, which has the same credit rating, SK디앤디 has a crucial advantage: the possibility of strong support from the SK Discovery Group. As of the end of 2024, SK Discovery and its affiliates hold 31.3% of SK디앤디’s common stock, giving them the capacity to provide support in case of an emergency. This “plus alpha” could play a significant role in stabilizing the company’s financial situation.
Future Outlook
The future credit rating outlook for SK디앤디 largely depends on the smooth progress of its main business operations and its ability to continue generating profits while reducing financial burdens. Credit rating agencies have stated that if SK디앤디’s borrowing dependency ratio falls below 40%, there could be a potential upgrade in its credit rating. On the other hand, if the ratio exceeds 60% and continues at that level, there could be a risk of a downgrade.
In conclusion, while SK디앤디 faces challenges in a volatile real estate market, the support from its parent company and its efforts to reduce debt provide a buffer against further financial strain. The company’s future will depend on its ability to manage risks effectively and maintain financial flexibility in a challenging economic environment.