[Click eStock] "SK Square, Target Price 120,000 Won... Low Merger Possibility with SK Inc."

NH Investment & Securities raised the target price of SK Square to 120,000 KRW on the 19th. They judged that the possibility of a merger between SK Inc. and SK Square, which has been mentioned in some quarters, is low.

Jaemin Ahn, a researcher at NH Investment & Securities, analyzed, "SK Hynix, which accounts for the largest portion of SK Square's net asset value (NAV), has seen its stock price rise rapidly as its performance improves with the semiconductor industry recovery, leading to a concurrent increase in SK Square's corporate value."

In addition to the improvement in the semiconductor business conditions, other subsidiaries' efforts to improve their businesses, such as T Map Mobility's sales growth and 11st's efforts to improve profitability, are ongoing. SK Square's target price is calculated by summing the corporate values of its subsidiaries, reflecting the rise in the stock prices of its assets, and maintaining a target discount rate of 50% against NAV as the standard. Taking this into account, the corporate value was estimated at 16.6 trillion KRW.

The reason for analyzing the low possibility of a merger with SK Inc. is that if the merger proceeds, the stake of the current major shareholder, Chairman Chey Tae-won, would inevitably be diluted. Researcher Ahn stated, "Considering the possibility that cash may be needed depending on the outcome of the major shareholder's divorce lawsuit, the likelihood of making such a decision is low," and added, "Even if an actual merger is attempted, the chance that more than two-thirds of all shareholders will approve it as a special resolution at the general meeting of shareholders also seems low."

However, considering the major shareholder's need for cash, SK Square's cash dividends are expected to increase. SK Square did not pay cash dividends until last year and only conducted share buybacks. SK Square announced its shareholder return policy to pay shareholders at least 30% of recurring dividend income by 2025 and to additionally return part of the investment performance to shareholders. In the second quarter, it sold all its shares in Krafton, and further sales of shares in holding companies are also planned.