On the 30th, SK Securities maintained its investment opinion of "Buy" and a target price of 300,000 KRW for SK. This is because the recent treasury stock cancellation is expected to highlight the shareholder return policy.
Choi Gwan-soon, a researcher at SK Securities, stated, "We expect this to serve as a catalyst for the revaluation of SK's stock price, which had been sluggish despite the solid stock prices of its subsidiaries."
SK resolved to cancel treasury shares acquired through the 2022 trust agreement the day before. The number of shares to be canceled is 951,000 shares (1.3%), with a purchase amount of 199.8 billion KRW. After the cancellation, SK's treasury stock ratio will decrease from 25.6% to 24.6%. In March last year, SK announced a medium-term shareholder return policy that includes ① a basic dividend of at least 30% of recurring dividend income and ② an annual treasury stock purchase of at least 1% of market capitalization until 2025, and also disclosed that treasury stock cancellation would be considered as a shareholder return option. This treasury stock cancellation is the full cancellation of treasury shares acquired last year and is the first treasury stock cancellation since the merger of SK C&C and SK in 2015. As a result, the total shareholder return amount, including dividends and treasury stock cancellation for the 2022 fiscal year, increased by 7.2% year-on-year to 479.9 billion KRW.
Researcher Choi explained, "Although the medium-term dividend policy announced last year disclosed that the cancellation of annually purchased treasury shares would be considered an option, this treasury stock cancellation increases the possibility of canceling treasury shares to be purchased until next year," adding, "Currently, SK's discount rate compared to NAV is 62%, indicating undervaluation, so treasury stock purchase and cancellation are considered necessary conditions for enhancing shareholder value."
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