SK Securities said on the 26th that SK Square could benefit as shareholder returns expand and the equity value rises with SK hynix's U.S. listing. It maintained a Buy rating and raised its target price to 740,000 won from 580,000 won. SK Square's previous close was 605,000 won.
Choi Gwan-soon, an analyst at SK Securities, gave a positive assessment of SK Square's potential for future shareholder returns and the increased investment appeal from SK hynix's listing on the U.S. securities market.
This is because retained earnings, which can be used as funds for future dividends, are set to increase, and as SK hynix seeks a U.S. market listing within the year, a rise in SK hynix's share price could lift SK Square's equity value as well.
First, regarding the expansion of shareholder returns at SK Square, Choi said, "At the shareholders meeting the day before, a proposal to reduce the capital reserve passed, and 589 billion won in capital reserve was transferred to retained earnings," adding, "The amount transferred this time can be used as shareholder-return funds starting in 2027."
SK Square had already transferred 1 trillion won of capital reserve to retained earnings at the 2023 shareholders meeting and used it for shareholder returns.
Choi also said, "SK Square announced a shareholder-return policy for 2026 to 2028," adding, "During this period, 30% of recurring dividend income and part of investment performance will be returned to shareholders, and this year's total shareholder-return amount is 310 billion won, or 70% of recurring dividend income."
Recurring dividend income refers to dividend revenue that flows in repeatedly each year, and this year's 310 billion won in dividend income consists of 110 billion won for share buybacks and 200 billion won in cash dividends.
Choi also judged that, as SK hynix is pursuing a U.S. listing within the year, there is significant potential for an increase in the equity value of SK Square, which holds 20.5% of SK hynix.
Choi explained, "Under the Fair Trade Act's subsidiary equity requirements for holding companies, SK Square is expected to maintain its SK hynix equity stake at 20% or higher despite SK hynix issuing American depositary receipts (ADR)," adding, "If SK hynix's share price rises after issuing ADRs thanks to broader access by global investors and multiple expansion, SK Square's equity value will also increase."