[Click e-Stock] "SK Square Target Price Up 44%... Highlighted as Alternative to Hynix"

Daishin Securities has raised its target price for SK Square, which has emerged as an alternative to SK Hynix, by 44% to 5.6 million won. The investment rating remains "Buy."

On January 28, Kim Hoejae, a researcher at Daishin Securities, stated regarding SK Square, "We are applying a 20% discount rate, reflecting the rise in SK Hynix’s market capitalization-which accounts for 95% of SK Square’s net asset value (NAV)-and the outlook for further gains." The target price for SK Square is based on a 40% discount applied to its NAV. Since SK Square’s spin-off and new listing on November 29, 2021, the average discount rate has been 67%.

Daishin Securities believes that the discount rate to NAV for SK Square, which has gained attention as an alternative due to the rise in SK Hynix’s share price, will narrow. As SK Hynix’s share price surged, its market cap share exceeded 10% in October last year, triggering the 10% single-stock holding limit for equity funds under Article 8 of the Enforcement Decree of the Capital Markets and Financial Investment Services Act.

Researcher Kim noted, "The market capitalization ratio announced on January 2 reflected the December average at 12.3%, but as of the previous day, SK Hynix’s market cap share stood at 14.3%," adding, "The attractiveness of SK Square as an alternative investment to SK Hynix has increased." He explained that funds unable to buy SK Hynix are now flowing into SK Square, which holds a stake in SK Hynix.

The outlook for this year’s shareholder return policy was also assessed positively. Researcher Kim predicted, "With the inflow of approximately 500 billion won from the remaining proceeds of the SK Shieldus sale, the scale of shareholder returns this year is estimated at 390 billion to 440 billion won." Dividends and harvesting results from SK Hynix are also reflected in this estimate.