DB Securities said on the 12th that the discount to net asset value (NAV) for SK Square could narrow to 30% or less by 2028. SK Square is an intermediate holding company that owns subsidiaries including SK hynix, and its shares have traded at a discount to NAV. If the discount narrows, its market capitalization could expand through a reappraisal of the corporations' value.
At the same time, it maintained a "Buy" investment opinion and raised the target price to 740,000 won from the previous 354,000 won. SK Square's closing price in the previous trading day was 565,000 won.
Shin Eun-jung, an analyst at DB Securities, said, "The average discount of 58% last year reached the target early as it averaged 45% this year," adding, "If SK hynix's share price trends higher, shareholder return policies continue, and new semiconductor and artificial intelligence (AI) investments proceed smoothly, further narrowing to 30% or less in 2028 is also possible."
She also assessed positively that profitability is improving thanks to cost efficiencies at subsidiaries. Shin said, "Tmap Mobility turned positive on annual earnings before interest, taxes, depreciation and amortization (EBITDA) on the back of increased revenue from its data business," adding, "11Street is also expected to reduce losses through more efficient logistics operations and a direct-purchase business."
SK Square posted operating profit of 3 trillion won in the fourth quarter of last year. That was up 87.6% from a year earlier.
Shin explained that gains in SK hynix's share price are helping expand SK Square's NAV. Shin said, "SK Square's NAV, reflecting the increase in SK hynix's share price, is around 139 trillion won," adding, "Applying a 30% discount to this would support a 740,000 won target price."