Trapped at a 6x PER, Hynix Heads to Nasdaq at a KRW 45 Trillion Valuation... Will Major Shareholder SK Square Reap the Windfall?

[Financial News] As SK hynix's American Depositary Receipt (ADR) listing on Nasdaq draws near, market attention is turning to the possibility of a revaluation of its largest shareholder, SK Square. Analysts say that if the U.S. listing broadens access for global investors and eases the long-standing Korea Discount, the rise in the value of SK hynix's stake could have a positive impact on SK Square's net asset value (NAV) and its overall share price.
According to the Financial Supervisory Service's Data Analysis, Retrieval and Transfer System (DART) on the 2nd, SK hynix plans to list its ADR on the Nasdaq market on the 10th. The offering is worth about KRW 45.5 trillion, or roughly 2.5% of the total number of shares issued.
SK Square, which currently holds a 20.5% stake in SK hynix, is being cited as a direct beneficiary of the U.S. listing because changes in asset value are closely tied to its corporate value.
Brokerage analysts believe the ADR listing will help end the prolonged undervaluation of SK hynix relative to global memory chip rivals.
In fact, although SK hynix is posting higher operating profit than its rival Micron, its 12-month forward price-earnings ratio (PER) remains around 6x. That is only about half of Micron's multiple, which stands at roughly 11x.
There is also speculation that passive funds flowing in as SK hynix establishes itself in the U.S. market will boost SK Square's asset value. Passive funds refer to money that goes into funds or exchange-traded funds (ETF) that track a specific index. Once a stock is added to the Nasdaq Composite Index (NASDAQ), funds that follow the index are required to buy the stock mechanically under their rules.
However, concerns remain over dilution of SK Square's stake due to new share issuance and the burden of securing long-term funding. If new shares are issued, SK Square's stake would fall to around 20%, the minimum level under the Monopoly Regulation and Fair Trade Act (MRFTA).
Another challenge is the huge amount of capital needed if the company repeatedly buys back and cancels treasury shares to maintain control. Caution is also growing that long-term shareholder returns and a clear improvement in earnings must support any such move.
sms@fnnews.com Sung Min-seo Reporter