[Click eStock] "SK Share Value Realization... Target Price 240,000 Won"

On the 22nd, SK Securities maintained a target price of 240,000 KRW and a buy rating for SK.

On the 19th, SK decided to contribute 23.4 million common shares (100%) of SK S.E.Asia Pte.Ltd. (which holds 100% of the semiconductor module company Essencore) as a capital increase in kind to SK Ecoplant. The amount of the capital contribution in kind is 670 billion KRW, and SK will acquire 9,131,092 shares of SK Ecoplant. Along with this, SK decided on a comprehensive stock swap between SK Materials Airplus (a manufacturer of industrial gases for semiconductors) and SK Ecoplant. 6.8 million common shares (100%) of SK Materials Airplus will be transferred to SK Ecoplant, and SK will receive 11,076,167 shares of SK Ecoplant under the contract. The equity value of SK Materials Airplus was estimated at 812.7 billion KRW. Upon completion of the capital contribution in kind and stock swap, SK’s stake in SK Ecoplant will increase from 41.8% as of the end of 2023 to 61.7% based on common shares. As SK Ecoplant incorporates financially strong subsidiaries, an improvement in SK Ecoplant’s financial structure is expected.

The book values of SK S.E.Asia Pte.Ltd. and SK Materials Airplus held by SK were 25.8 billion KRW and 339.6 billion KRW respectively as of the end of 2023. Given that the capital contribution in kind and stock swap recognized values of 670 billion KRW and 812.7 billion KRW respectively, it is positive in that the value of the holdings has been realized. Additionally, the per-share value of SK Ecoplant was determined to be 72,277 KRW, and considering the capital contribution in kind, stock swap, and the conversion of preferred shares to common shares, SK Ecoplant’s enterprise value corresponds to 4.6 trillion KRW. Kwonsoon Choi, a researcher at SK Securities, stated, “Following the merger of SK Innovation and SK E&S, the incorporation of Essencore and SK Materials Airplus into SK Ecoplant is expected to bring not only mid- to long-term business synergies but also improvements in the financial structure of major SK Group affiliates.” He added, “It is positive in terms of realizing the value of unlisted subsidiaries held.” The stock price benefits are expected to be concentrated on SK, the holding company.