"SK hynix Leads, SK Innovation Lifts It": SK Target Price Up 37.5%... LS Still Undervalued Despite 153% Surge in Operating Profit [Stocktopia]

[Financial News] Here is a roundup of major brokerage reports as of the morning of Aug. 18.
SK Group's target price rose sharply as the value of its subsidiary stakes jumped on improved earnings from SK hynix and SK Innovation.
LS Group posted second-quarter results that far exceeded market expectations, supported by broad-based growth across all subsidiaries, but its share price was still seen as undervalued. By contrast, CJ Group saw its target price cut as most of its subsidiaries posted higher sales but weaker profitability due to cost pressures.
◆SK Group (034730)― Hana Securities / Research Analyst Choi Jeong-wook
- Target price: 770,000 won (up 37.5% from 560,000 won) | Previous close: 585,000 won
- Investment rating: Buy (maintained)
Hana Securities raised its target price for SK Group sharply to 770,000 won, saying the company is likely to see a significant increase in stake value thanks to the strong earnings improvement at its subsidiaries.
In the second quarter, the subsidiaries delivered solid results across the board. Operating profit at SK Square surged 1,274% from a year earlier, reflecting record earnings at SK hynix, while SK Innovation swung back to profit with operating profit of 350 billion won. SK Telecom also posted a 67.6% increase in operating profit, helped by a base effect from last year's cyber intrusion costs and growth in its AI data center business.
SK Group also reduced governance-related concerns by agreeing to sell 47.32 million shares of SK Siltron to Doosan Group for 230 billion won. That is because the value of Chairman Chey Tae-won's personally held SK Siltron stake is estimated to be close to the property division amount set in the case sent back on appeal.
Research analyst Choi said, "If that stake is sold, in theory, a substantial portion of the property division payment could be secured without selling SK shares." He added, "The property division issue will be reviewed again by the Supreme Court, so uncertainty remains until a final ruling, but concerns over an overhang from a possible sale of SK shares should ease." The analysis suggests that one of the factors weighing on the stock has now been removed as fears of a large shareholder stake flooding the market have diminished.※ OverhangThis refers to potential selling pressure that could enter the market at any time. Even if the shares are not actually sold, the mere possibility that they could be dumped later can continue to weigh on the stock.
◆LS Group (006260)― Meritz Securities / Research Analyst Jang Jae-hyuk
- Target price: 640,000 won (unchanged) | Previous close: 323,500 won
- Investment rating: Buy (maintained)
Meritz Securities kept its target price for LS Group at 640,000 won, saying the stock remains undervalued even after the company delivered a surprise second-quarter performance on the back of strong results from all subsidiaries.
Research analyst Jang said of the key subsidiaries that drove second-quarter earnings, "Revenue from high-margin ultra-high-voltage submarine projects was somewhat concentrated in the first half, and major subsidiaries have seasonal patterns, so second-half results may be flat or slightly weaker than in the second quarter."
He added, "As busduct sales continue to expand and new revenue contributions from Donghae submarine units 4 and 5 begin, the company will enter a full-scale growth phase from 2027." That means there may be a short-term pause, but the strong medium- to long-term growth trajectory remains intact.
He also said, "The earnings growth at LSCUS and the stronger profit base at LS MnM have been confirmed once again through results, and the sustained high sulfuric acid price and rising copper prices are benefiting key affiliates, so the stock is still in undervalued territory." Even if the company takes a breather in the second half, the market is still not fully reflecting its earnings.※ BusductThis is a wiring system that sends large amounts of electricity through broad copper or aluminum plates inside a metal enclosure instead of bundling multiple cables together. It is quick to install and highly heat-resistant, making it widely used in data center workloads and large buildings that consume substantial amounts of power.
◆CJ Group (001040)― Hana Securities / Research Analyst Choi Jeong-wook
- Target price: 200,000 won (down 16.7% from 240,000 won) | Previous close: 138,100 won
- Investment rating: Buy (maintained)
Hana Securities lowered its target price for CJ Group to 200,000 won, saying that while major subsidiaries managed to grow in scale, profitability in the second quarter fell short of expectations due to continued cost pressures.
Research analyst Choi said of the weak results, "Not only listed affiliates but also CJ Olive Young and CJ Foodville missed expectations. Overall, most subsidiaries are growing in scale, but profitability is deteriorating as cost burdens increase." The assessment is that sales expanded as the company gained market share at home and abroad, but logistics and marketing costs prevented it from improving fundamentals.
Still, he expressed optimism about the overseas expansion momentum of Olive Young, a key unlisted affiliate. Choi said, "The launch of offline stores and a dedicated online mall in the United States was completed in the second quarter, and the Sephora partnership B2B business began in August, so the global expansion strategy could clearly become an additional growth driver." He added, "The company also needs to pay some attention to restoring operating margin through efforts to improve cost efficiency."
[email protected] Sung Min-seo Reporter