[Click eStock] "SKT, Mobility Spin-off Is a Clear Positive"

Temporary Stock Price Drop Is Overblown... "Current Stock Price Barely Reflects Mobility Value"
High Potential to Become a Leading Company in Autonomous Driving and Sharing Economy in the Future

[Asia Economy Reporter Minwoo Lee] An analysis has emerged that SK Telecom's mobility spin-off is a clear positive development. The spun-off mobility division is expected to grow into a business leading 5G autonomous vehicles and the sharing economy within the group.

On the 15th, Hana Financial Investment maintained a 'Buy' rating and a target price of 330,000 KRW for SK Telecom. The previous day's closing price was 230,500 KRW. This is based on the expectation of stable earnings in the upcoming Q3 earnings announcement scheduled for the 5th of next month, combined with the positive factor of the mobility spin-off.

According to industry sources, SK Telecom is expected to hold a board meeting on the day to decide on the mobility spin-off. It is anticipated that SK Telecom will proceed with a physical spin-off method, owning all issued shares of the newly established mobility corporation. This is the same method used by LG Chem when it spun off its battery business. Based on T map, which holds a market share of 70%, it is expected to evolve into a 5G autonomous driving company and pursue an initial public offering (IPO) in the long term.

Although the stock price closed down 4.95% due to foreign selling the previous day, Hana Financial Investment analyzed this as a buying opportunity. Unlike LG Chem, whose stock price fell after deciding to spin off its battery division, it is judged that the current market capitalization of SK Telecom does not significantly reflect the value of the mobility business. Kim Hongsik, a researcher at Hana Financial Investment, explained, "Uber's equity participation should be seen not as dilution but as an opportunity for growth," adding, "Ultimately, the SK Telecom mobility division being spun off is expected to evolve into a 5G autonomous driving company and pursue an IPO in the long term, and it is likely to be assigned a surprisingly high value."

Hana Financial Investment has identified that the net assets of the mobility subsidiary being spun off will be less than 1% of SK Telecom's current net assets. Its sales are still only around 100 billion KRW. There has been no significant valuation given in the stock market so far. Therefore, the mobility spin-off is unlikely to have a major impact on SK Telecom's stock price, and rather, there is a high possibility of stock price increase due to highlighted growth potential after the spin-off.

Researcher Kim stated, "The SK Group currently believes that SK Telecom's corporate value is excessively undervalued and is continuously pursuing spin-offs and IPOs of high-growth business divisions to increase corporate value," adding, "This mobility spin-off is in the same context. Ultimately, SK Telecom is highly likely to nurture the mobility subsidiary within the SK Group as a business leading autonomous vehicles and the sharing economy, and Uber's equity participation is largely due to this."