Daishin Securities on the 25th said SK Square continues to be attractive as an alternative to SK hynix. It maintained a "Buy" rating and raised the target price by 36% to 760,000 won.
SK Square's revenue last year was 1.4 trillion won. Operating profit was 8.8 trillion won, up 124% from a year earlier.
It appears to have been driven by SK hynix's strong results. Researcher Kim Hoe-jae at Daishin Securities said, "It's the impact of increased equity-method gains from Hynix and improved profit and loss across the held portfolio."
Analysis suggests it is sufficiently attractive as an alternative to SK hynix. As SK hynix's share price surged, the company's market capitalization weight exceeded 10% in Oct. last year. As a result, the 10% single-stock inclusion limit for equity funds came into effect.
Researcher Kim noted, "As SK Square emerged as an alternative to SK hynix, the discount to net asset value (NAV) narrowed to 47% as of Jun. last year," adding, "After SK hynix soared, SK Square's discount to NAV widened to 56% in Aug. last year, but hit a record-low 45% in Feb. this year." As of the previous day, the discount was 46%.
As SK hynix's market-cap weight exceeded 10%, the Korea Financial Investment Association has been adjusting Hynix's market-cap weight once a month. However, with the sharp share-price rise, a gap has emerged between the weight proposed by the association and Hynix's actual market cap.
Researcher Kim said, "The market-cap weight announced on the 2nd reflects the average January market cap at 13.9%, but as of the previous day SK hynix's market-cap weight was 15.0%," adding, "The alternative investment appeal of SK Square relative to SK hynix remains intact."