[Click e-Stock] "SK Square Fully Attractive as Alternative to Hynix... Target Price Raised"

On the 25th, Daishin Securities maintained its "buy" investment rating on SK Square and raised its target price from 5.6 million won to 7.6 million won.

On the 25th, Kim Hoe-jae, a researcher at Daishin Securities, said of SK Square's key investment points, "As SK Hynix's share of total market capitalization exceeds 10%, SK Square has become increasingly attractive as an alternative investment for institutional investors."

Kim analyzed that, under the Korea Financial Investment Association's limits on the weighting of a single stock in portfolios, direct investment in SK Hynix is constrained, making SK Square a fully viable alternative. In fact, 96% of SK Square's net asset value comes from the value of its stake in SK Hynix.

The improvement in earnings is also clear. Last year, annual revenue was 1.4123 trillion won, down 14% year-on-year, but operating profit surged 124% year-on-year to 8.7974 trillion won. This was driven by a sharp increase in equity-method gains from SK Hynix, as well as improved profit and loss at key portfolio companies such as T Map Mobility and 11st.

Looking at the details, T Map Mobility achieved a turnaround to positive earnings before interest, taxes, depreciation and amortization (EBITDA) as revenue from its data business grew 36% year-on-year. Its monthly active users (MAU) reached an all-time high of 15.39 million. 11st also posted a profit in its open market segment, reducing its operating loss by 35.8 billion won from a year earlier.

The company is also strengthening its shareholder return policy. Since initiating its first shareholder return in 2023, SK Square has acquired a cumulative 710 billion won worth of treasury shares and canceled 610 billion won of them. Recently, it also completed an additional 100 billion won buyback, demonstrating a strong commitment to supporting its share price.

Kim said, "As SK Hynix's price-to-book ratio (PBR) is hitting a new historical high, the discount on SK Square's share price should also narrow further," adding, "The fact that SK Square has announced a plan to enhance corporate value by reducing its share price discount to 30% or less by 2028 will also have a positive impact on its future share price trend."