[Click eStock] "SK REITs, Reduced Uncertainty... Target Price Up"

NH Investment & Securities on the 7th raised the target price for SK REITs from 5,500 KRW to 6,300 KRW, stating that "approximately 1 trillion KRW of debt refinancing has been completed, and the repayment burden of short-term electronic bonds related to the water treatment center has also decreased." The buy rating was maintained.

On the same day, Eun-sang Lee, a researcher at NH Investment & Securities, said, "This reflects the reduction in funding uncertainty and the decrease in the repayment burden of short-term electronic bonds."

Lee explained, "The average refinancing interest rate for about 1 trillion KRW of debt related to the Seorin Building and gas stations, which matured last month, was 4.16%, in line with NH Investment & Securities' estimates. The short-term electronic bonds related to the water treatment center have been repaid by about 50% compared to the beginning of the year through bond issuance, reducing the related burden."

However, a 15% discount rate was applied considering the convertible bonds (convertible into 27.76 million shares, 10% of issued shares) that have entered the conversion request period. He noted, "Since all convertible bonds have entered the conversion request period and the current stock price is higher than the conversion price, the possibility of conversion cannot be excluded."

Dividends are expected to be maintained at the current level. Lee said, "It is expected that a quarterly dividend per share (DPS) of at least 66 KRW can be paid until the first half of next year by utilizing capital injection and gains from gas station sales," adding, "The required capital injection amount for this is 7.6 billion KRW."

He added, "An increase in dividends through improved earnings will be possible after the second half of next year," and "At that time, the maturities of debt related to SK U Tower (4.44%) and bonds related to the water treatment center (3.94%~4.17%) will arrive, so dividend expansion through reduced financial costs is expected."