NH Investment & Securities announced on August 18 that it has lowered the target price for SK Square from 2.7 million won to 2.28 million won, reflecting the recent adjustment in SK Hynix's stock price. The investment rating remains at 'buy.'
Analyst Ahn Jae-min stated, "The recent decline in SK Hynix's stock, driven by concerns over peak operating profit, has also affected SK Square's share price. However, the market's worries about limited price increases in memory due to long-term contracts (LTA) are excessive."
Ahn noted, "Considering the explosive growth of neo-cloud companies like Nebius and CoreWeave, demand for AI infrastructure remains robust, and the semiconductor industry is expected to continue its positive trend."
He analyzed that once Samsung Electronics and SK Hynix reveal their shareholder return policies, investor sentiment in the semiconductor sector will recover, leading to a rebound in SK Square's stock price. Ahn pointed out, "During the recent stock price increase, SK Square demonstrated greater price elasticity compared to SK Hynix, suggesting it will recover more quickly in a rebound phase."
Ahn also positively assessed the proactive shareholder return policies. SK Square distributed a dividend of 1,500 won per share, totaling 204.3 billion won, in June. It plans to buy back 40 billion won worth of shares this year and 70 billion won next year.
The anticipated increase in dividend income due to SK Hynix's expanded shareholder returns is also seen as a positive factor. Ahn projected, "SK Hynix's strengthened shareholder return policy is expected to be announced during the third-quarter earnings release. If SK Hynix's dividend per share increases to 13,600 won, SK Square could secure approximately 2 trillion won in dividend income."
He added, "With the increased dividend income, SK Square may actively pursue mergers and acquisitions (M&A) targeting promising companies within the semiconductor value chain."
* This article has been translated by AI.
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