Hana Securities said on the 20th that SK's share price is expected to rise on the back of treasury share cancellation and higher subsidiary equity values. It kept its "Buy" rating and raised its target price to 400,000 won from 290,000 won. SK's closing price in the previous trading day was 346,000 won.
Choi Jeong-uk, an analyst at Hana Securities, said, "On expectations for a semiconductor supercycle, SK hynix's corporate value keeps rising," adding, "SK Innovation also has a higher likelihood of improved results in the refining and energy institutional sector, and SK Telecom also has a high possibility of profit normalization, so the favorable cycle for subsidiaries is likely to continue."
SK said in a filing that on the 10th it held a board meeting and resolved to cancel all of 20.1% (14.69 million shares) of its treasury shares, excluding 4.5% (3.29 million shares) for employee compensation, out of the 24.6% (17.98 million shares) previously held. Still, the share price fell after the cancellation announcement.
On this, Choi said, "The scheduled cancellation date is Jan. 4, 2027, so it is not being carried out immediately, and the related matter was already somewhat recognized by the market," adding, "The decrease in the number of shares from the treasury share cancellation, which lifts earnings per share (EPS) and book value per share (BPS) and improves return on equity (ROE), will ultimately be reflected positively in the share price over the mid to long term."
In the fourth quarter last year, SK posted revenue of 30.1 trillion won and operating profit of 391.7 billion won. Revenue rose 1.3% from a year earlier, and operating profit swung to a surplus.
Regarding the swing to an operating profit, Choi analyzed, "As SK hynix set a new record for the largest quarterly results, equity-method gains at SK Square, which holds 20.1% equity, increased sharply," adding, "SK Innovation saw improved oil and chemical results even though SK On's operating loss widened."
Hana Securities also positively assessed that SK's net debt, which investors had worried about, is declining, and that cash inflows are expected through the disposal of equity stakes in SK Biopharmaceuticals and SK Siltron.