Daishin Securities on July 13 raised its target price for SK Square stocks to 2.10 million won from 1.87 million won, citing the premium on SK Hynix's US depositary receipts and anticipated corporate value enhancement effects. The brokerage lowered the discount rate applied to net asset value (NAV) to 30% from previous levels, reflecting SK Hynix's rising market capitalization and the US DR premium. Daishin Securities assessed that SK Square's upward momentum is likely to continue in the near term, driven by the company's holdings structure where approximately 98% of its NAV consists of SK Hynix equity value.
SK Square Stock Performance Since November 2024
Since SK Square announced its corporate value enhancement plan in November 2024, the stock has risen 1716%, outpacing SK Hynix's 1164% gain over the same period. Following the November announcement of a revised plan to lower the target NAV discount rate from 50% to 30%, SK Square rose 483% compared to SK Hynix's 311% increase.
SK Hynix Shareholder Returns Impact SK Square Valuation
Daishin Securities stated that expanded shareholder returns from SK Hynix will directly benefit SK Square's corporate value. SK Hynix dividends serve as both cash inflows and funding sources for SK Square's shareholder returns, while any share buyback and cancellation programs would increase the value of SK Square's holdings. The brokerage noted that additional shareholder returns funded by capital raised through the US DR listing would further elevate SK Square's corporate value.
SK Hynix US DR Premium Supports Upside
SK Hynix depositary receipts recently listed on US markets are trading at approximately a 15-18% premium over domestic shares. Daishin Securities analyzed historical cases of KT and SK Telecom, finding that domestic shares often rose alongside the formation of DR premiums, and assessed that SK Hynix may follow a similar pattern. The brokerage calculated SK Square's fair value at 2.063 million won and set the target price at 2.10 million won, representing approximately 46% upside potential from current levels. Analyst Kim Hoe-jae stated, "We applied a 30% NAV discount rate reflecting SK Hynix's expanding market cap weight and DR premium. Hynix's dividends, share buybacks, and DRs are all core factors that can drive SK Square's stock price appreciation and cash inflows."
FAQ
What target price did Daishin Securities set for SK Square stocks on July 13?
Daishin Securities raised its target price for SK Square to 2.10 million won from the previous 1.87 million won, applying a 30% discount rate to net asset value to reflect SK Hynix's market cap growth and US depositary receipt premium.
How did SK Square stocks perform compared to SK Hynix since November 2024?
SK Square rose 1716% since announcing its corporate value enhancement plan in November 2024, outperforming SK Hynix's 1164% gain over the same period. After the revised plan in November lowering the target NAV discount to 30%, SK Square gained 483% versus SK Hynix's 311%.
