Achieving NAV Discount Rate Below 50% and Price-to-Book Ratio (PBR) Above 1 by 2027
Promoting New Investments in Future Promising Sectors Such as Semiconductors
Investment specialist SK Square announced a shareholder return plan worth 200 billion KRW. It also stated its intention to improve the performance of portfolio companies that have yet to turn a profit in order to increase corporate value.
On the 21st, SK Square announced a shareholder return plan and corporate value enhancement measures totaling 200 billion KRW. First, it will cancel 100 billion KRW worth of treasury shares purchased in April this year, and from the 25th, it plans to complete the purchase and cancellation of an additional 100 billion KRW worth of treasury shares within three months.
The core goals for enhancing corporate value are set as follows: ▲reduce the net asset value (NAV) discount rate to below 50% by 2027 ▲achieve a return on equity (ROE) exceeding the cost of equity (COE) from 2025 to 2027 ▲attain a price-to-book ratio (PBR) of 1 or higher by 2027.
It is notable that SK Square is the first domestic holding company to set the net asset value (NAV) discount rate as a corporate value enhancement target. The NAV discount rate is an indicator showing how the net asset value (the sum of portfolio companies’ equity values) is evaluated relative to market capitalization. A lower discount rate indicates a more appropriate corporate valuation.
SK Square’s NAV discount rate improved from 73.0% at the end of last year to 65.8% in the third quarter of this year. The company plans to reduce this to below 50% by 2027.
The concept of cost of equity (COE) was also added as a corporate value enhancement goal. The target is to achieve a return on equity (ROE) exceeding the cost of equity (COE) from 2025 to 2027.
This expresses management’s commitment to generating a return on equity (ROE) ? the profit rate created using shareholders’ capital ? that exceeds the minimum return rate (COE) shareholders require from the company. As of the third quarter of this year (last 12 months), SK Square’s ROE is 10.3%, significantly surpassing the KOSPI 200’s ROE of 5% for the same period.
Finally, the company set a goal to achieve a price-to-book ratio (PBR) of 1 or higher by 2027. PBR is an indicator used to assess how a company’s market value is evaluated relative to its book value. A higher figure indicates that the market value is being properly recognized. SK Square’s PBR as of the third quarter this year is 0.73.
To achieve these corporate value enhancement goals, SK Square has established five specific action plans.
First, it will actively communicate with shareholders centered around the board of directors to discuss and implement corporate value enhancement measures. It also plans to appoint additional outside directors with independence and expertise.
Second, it will execute optimal capital allocation between new investments and shareholder returns based on clear criteria considering investment profitability. When the NAV discount rate is high, it plans to expand treasury share repurchases and cancellations.
Additionally, based on its shareholder return policy, it will consistently and predictably execute shareholder returns to continuously share the portfolio management performance of the investment specialist company with shareholders.
Through profitability-focused management, it aims to achieve profitability in major portfolios by 2027 and promote new investments in future growth areas such as semiconductors and artificial intelligence (AI).
Han Myung-jin, CEO of SK Square, stated, "To enhance corporate value, we will communicate with shareholders centered on the board of directors and execute optimal capital allocation and predictable shareholder returns. We will lead the company’s growth by continuously strengthening portfolio profitability and promoting new investments in promising future sectors."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
