Yuanta Securities announced on May 11 that it has raised its target price for SK from 550,000 won to 830,000 won, reflecting a 51% increase due to the rising value of its subsidiaries and expectations for improved profitability driven by advancements in artificial intelligence (AI) and the semiconductor industry. The firm maintained its "buy" rating on the stock.
Lee Seung-woong, a researcher at Yuanta Securities, noted that the stock prices of major subsidiaries, including SK Square and SK Telecom, have surged by 228% and 76%, respectively, since the beginning of the year. This has led to a 102.4% increase in the value of SK's listed subsidiaries, now estimated at 72.1 trillion won. He added that the ongoing positive trends in the AI and semiconductor sectors are expected to enhance the company's profitability.
Yuanta cited the soaring value of SK's listed subsidiaries and strengthened earnings capacity as key reasons for the target price increase. Notably, the consensus for SK Hynix's revenue has been significantly raised from 140 trillion won at the start of the year to 328 trillion won recently, which is expected to boost royalty income as well. Consequently, SK's royalty income for this year is projected to reach 9.545 trillion won, marking a 158.5% increase from the previous year.
The trend of increasing dividends was also viewed as a positive factor. SK Telecom announced a quarterly dividend of 830 won per share, totaling 176.8 billion won, resuming its usual dividend policy. SK Square is also set to implement its first cash dividend of 200 billion won this year.
Yuanta Securities assessed that the group's financial restructuring efforts are nearing completion. Recently, SK Eco Plant increased its stake from 67.6% to 72.2%, and in March, SK sold a 13.94% stake in SK Biopharmaceuticals for 1.25 trillion won, planning to use the proceeds for a capital increase in SKC.
Lee stated, "In the medium to long term, the group's business portfolio will be focused on AI and biotechnology," adding that SK Hynix (HBM), SK Telecom (AIDC and Anthropic), and SKC (glass substrates) will be key pillars in the AI sector.
He also highlighted the decision to retire approximately 4.8 trillion won worth of its own shares, which constitutes 20.1% of the total 24.6% of treasury shares held. This move is expected to alleviate uncertainties related to treasury shares and increase the potential for stock price appreciation due to a reduction in the number of shares in circulation.
* This article has been translated by AI.
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