[Click e-Stock] "SK Executing Value Enhancement Plan... Target Price Raised"

Target Price Raised 19.2% to 465,000 Won
Rebalancing Expected to Continue Through Subsidiary Stake Sales

On March 4, KB Securities raised its target price for SK to 465,000 won, up 19.2%, while maintaining its "Buy" investment rating.

Gunyoung Park, a researcher at KB Securities, stated in a report released that day that SK is currently executing its value enhancement plan, and he expects its price-to-book ratio (P/B) to rise as a result.

Park explained, "In SK's October 2024 value enhancement plan, the company set a target return on equity (ROE) of 'over 10% after 2027' and P/B targets of '0.7x for 2024 to 2026 and 1.0x after 2027.' To achieve these goals, SK formalized shareholder return policies such as portfolio rebalancing and setting a minimum dividend per share (DPS)."

Park assessed that SK is making progress toward these objectives. He said, "SK has actually executed rebalancing and shareholder return policies to achieve its targets. Last year's DPS was 8,000 won, exceeding both the minimum DPS of 5,000 won and the previous year's DPS of 7,000 won, and the current P/B is around 0.9x." He added, "With equity method gains expected to increase this year and next year, consolidated ROE is projected to exceed 10%, and further rebalancing is also anticipated. Therefore, we expect the P/B to continue rising going forward."

Rebalancing, such as the sale of stakes in subsidiaries, is expected to continue. SK plans to secure 1.25 trillion won through a contract to sell a 13.9% stake in its subsidiary SK Biopharm at 114,500 won per share. SK's stake in SK Biopharm will decrease from 64.0% to 50.1%, but it will retain its status as the largest shareholder. In addition, SK will simultaneously enter into a three-year price return swap (PRS) using the same volume as the underlying asset, so that the difference between the actual sale price and the reference price will be settled between the parties at maturity. If the share price rises above the reference price at the time of settlement, SK will take the gain; conversely, if the share price falls, SK will cover the loss for that portion.

Regarding this, Park analyzed, "This can be viewed as part of the rebalancing process. Since SK is also in the process of selling assets such as SK Siltron, it is highly likely that rebalancing, involving both asset monetization and improvement of the financial structure, will continue this year as well."

This content was produced with the assistance of AI translation services.