SK Securities Raises Target Price for SK Square Reflecting Hynix Stake Value

 
SK Securities announced on May 19 that it has raised the target price for SK Square to 1.45 million won while maintaining its investment rating at 'Buy.' This adjustment reflects an increase in equity method income from SK Hynix and the potential rise in stake value.
 
Choi Kwan-soon, a researcher at SK Securities, stated, "SK Square's consolidated operating profit for the first quarter reached 8.3 trillion won, marking the highest quarterly performance on record. This was significantly influenced by the increase in equity method income from SK Hynix."
 
He further noted, "Last year's net profit for SK Hynix was approximately 42.9 trillion won, but it is expected to expand to 205 trillion won this year, which is anticipated to drive improvements in SK Square's consolidated performance."
 
Choi also highlighted the strong correlation between SK Square's stock price and that of SK Hynix. He remarked, "Currently, 98.6% of SK Square's stake value is tied to SK Hynix, and SK Square's 52-week beta is higher than that of SK Hynix, indicating that it tends to experience greater stock price increases during periods of rising SK Hynix shares."
 
Additionally, he mentioned, "As SK Hynix's market capitalization increases, institutional investors' demand for SK Square is likely to rise due to regulations on single-stock holdings. This is a key reason why SK Square exhibits a higher beta compared to SK Hynix."
 
Moreover, he suggested that during the process of promoting overseas depositary receipts, SK Square is likely to maintain a stake of over 20% in SK Hynix to preserve its influence. He concluded that if further stock price increases for SK Hynix are anticipated, expanding SK Square's stake would be a viable strategy.