Expanded shareholder returns at SK Hynix a boon for SK Square’s corporate value

[The Financial News] Analysts say SK Hynix’s decision to buy back and cancel a large volume of its own shares could lead to a revaluation of SK Square, an intermediate holding company. With SK Square’s investment appeal centered on improved earnings at SK Hynix, an expansion of shareholder returns going forward is expected to provide an additional boost to the share price.
On the 14th, Kim Jang-won, an analyst at BNK Investment & Securities, gave SK Square a “Buy” rating and a target price of 1.6 million won, saying, “The benefits of its control over a subsidiary with clear earnings momentum are coming into focus.”
SK Square is an intermediate holding company that controls SK Hynix, the SK Group company with the largest market capitalization. Since the corporate split, it has restructured its investment portfolio by selling part of its stake in SK Shieldus, as well as One Store, Incross and others, and relinquishing its position as the largest shareholder of Dreamus Company. As a result, its structure centered on SK Hynix and its role in semiconductor investment have become even more pronounced.
In particular, expanded shareholder returns at SK Hynix are seen as a key variable.
SK Hynix plans to return at least 50% of its cumulative free cash flow from 2025 to 2027 to shareholders. Last August, it decided to buy back and cancel treasury shares worth 40 trillion won, and plans to announce the amount and form of any additional returns when it reports its third-quarter results.
Kim said, “Strengthened shareholder returns at SK Hynix will also have a positive effect on SK Square’s corporate value.” He noted, “However, since SK Square’s earnings and share price are highly correlated with those of SK Hynix, volatility tied to conditions in the semiconductor industry is a risk factor.”
He added, “Although its valuation has fallen from its peak, it still does not fully reflect even SK Hynix’s current share price. Taking into account the potential for further momentum from expanded shareholder returns, its investment appeal remains positive.” 


[email protected] Kim Gyeong-a Reporter