SK Square Shareholders Meeting Turns into a Rebuke over 'Stock Price Drop'..."Strengthening Shareholder Returns"

Partial Return of 400 Billion KRW from SK Shieldus Sale
Capacity to Invest 3 Trillion KRW by 2025...Semiconductors Targeted

"It has been a year since the split from SK Telecom, but they are still displaying the representative number from the SK Telecom days, and the IR department does not answer calls."

"The stock price was 60,000 won at the time of purchase, but now it is 38,000 won. Please explain whether it is possible to break even if we wait for 1 to 2 years, or long-term for 3 years."

After the split listing, the halved stock price turned the SK Square shareholders' meeting into a venue for angry individual shareholders' complaints.

SK Square held its 2nd regular shareholders' meeting on the 30th at its headquarters in Euljiro, Jung-gu, Seoul.

Park Jung-ho, Vice Chairman of SK Square, is answering reporters' questions after the shareholders' meeting.
[Photo by Oh Su-yeon]

First Shareholder Return Policy Announcement Since Launch

SK Square decided to regularly conduct share buybacks and cancellations or cash dividends from this year through 2025 to enhance shareholder value. The scale of shareholder returns is based on at least 30% of recurring dividend income, with some additional investment performance from portfolio companies.

Vice Chairman Park said, "Around August or September, more than 400 billion won will be deposited after the SK Shieldus sale process is completed. From that fund, we will use at least 30% of recurring dividend income for shareholder returns." He added, "For example, if more than 200 billion won out of 400 billion won is used to repurchase and cancel treasury shares, the number of issued shares will significantly decrease, theoretically causing the stock price to rise." He continued, "This year is the first year we can implement shareholder returns. Unfortunately, due to various unfavorable conditions, the stock price has fallen compared to the time of the split, and I am always sorry to the shareholders." He pledged, "We will do our best to create and execute a shareholder return policy that meets global standards as much as possible." After the shareholders' meeting, Vice Chairman Park told reporters, "We said we would return more than 30% of recurring profits to shareholders, but special events like the SK Shieldus sale will result in a slightly higher amount."

Last month, SK Square announced that it secured 864.6 billion won in investment funds by selling part of its stake in SK Shieldus to EQT Infrastructure, a global investment company under Sweden's Wallenberg family. Initially, it planned an IPO last year but withdrew due to market conditions.

The next investment target was identified as the semiconductor value chain. Vice Chairman Park said, "SK Square operates without debt, so it has a good environment for investment amid rising interest rates. We have about 3 trillion won in investment funds until 2025." He added, "A significant portion of the semiconductor value chain materials, parts, and equipment (SoBuJang) is in Japan. Most Japanese companies require numerous approvals even to buy a single share, making it difficult to acquire top-tier companies." He continued, "Recently, there has been a trend allowing acquisitions of good companies. We are focusing on creating synergy with Hynix."

Regarding 11st, he said discussions are underway with offline business operators and large mart companies. He stated, "Efforts to form scale by partnering 11st with some business operators will take place within this year."

At the SK Square headquarters in Euljiro, Jung-gu, Seoul, on the 30th, Vice Chairman Park Jung-ho is presenting to shareholders the shareholder return policy aligned with global standards and the company's vision at the 2nd regular general meeting of shareholders of SK Square.
[Photo by SK Square]

"They don't answer calls and only praise themselves"... Individual Shareholders' Protests Flood In

Shareholders continued to protest the sluggish stock price. On November 29, 2021, the first day of re-listing after the split, the stock closed at 76,000 won. Around 1 p.m. that day, SK Square's stock price was 39,250 won, about half the level.

Individual shareholder Kim Daehee said, "It has been a year since the split from SK Telecom, but they are still displaying the representative number from the SK Telecom days and do not answer calls." He criticized, "They say they will create a net asset value of 75 trillion won by 2025, but look at the shareholders' meeting. Investment companies rely on credit and trust, but the managing directors (MDs) only praise themselves." Vice Chairman Park responded that he would create a space where shareholders can visit SK Square and promised to improve communication with shareholders.

Another individual shareholder, Kang Seokchan, pointed out the repeated IPO withdrawals and asked whether the goal of creating a net asset value of 75 trillion won is achievable. He urged an explanation on whether it is possible to at least break even, noting that the stock price has fallen from the 60,000 won range at purchase to the 38,000 won range.

Vice Chairman Park replied, "Not every IPO attempt has failed; we entered a typhoon-like IPO market. Therefore, instead of an IPO, we sought strategic partners for sales." He added, "Regarding One Store, I don't think an IPO this year is advantageous. Holding companies with real value to raise SK Square's stock price is also a strategy." He further said, "Given the chaotic situation with global banks being sold, it is not right to boast that we will reach 75 trillion won by 2025. However, if you hold for three years, I will make sure you at least break even."

When asked by individual shareholders whether the shareholder return policy and treasury share cancellations, which would increase SK's stake, are a prelude to a merger with SK, Vice Chairman Park answered, "We are not managing SK Square to merge with SK under any circumstances." He continued, "We are continuously considering what SK Square must do to be evaluated in the market, and I promise to work to create SK Square's identity and growth momentum for the shareholders."

Vice Chairman Park will step down from the CEO position of SK Square after this shareholders' meeting. He said, "The vice chairman and CEO position of SK Square was brought over during the split from SK Telecom, but I am also the CEO of SK Hynix. Although I am making efforts due to promises with the market and shareholders, it is very difficult to uphold my own principles of sincerity and faithfulness." He added, "In this semiconductor winter, leadership must be more focused, and SK Square needs a CEO who can devote more time to its growth." He concluded, "As vice chairman of SK Square, I will remain involved as the person who built and grew this portfolio, so there should be no concerns about the new CEO."

Regarding the possibility of dividend cuts or capital increases at SK Hynix, he said, "Currently, we are managing cash flow due to a sharp drop in sales, but we are not considering dividend cuts or capital increases."

Meanwhile, at the shareholders' meeting, agenda items including ▲approval of the 2nd term financial statements ▲appointment of directors ▲reduction of capital reserves were proposed and approved. SK Square's 2022 annual consolidated financial statements showed sales of 4.5107 trillion won, operating profit of 162.8 billion won, and net profit of 256.1 billion won. President Park Seongha was appointed as an inside director of SK Square, and Lee Seonghyeong, CFO of SK Inc., was appointed as a non-executive director of SK Square.