SK Securities said on the 17th that expectations remain valid for a rise in the value of SK hynix equity holdings and expanded shareholder returns at SK Square. It maintained a "buy" recommendation and raised the target price from 1.45 million won to 1.85 million won. The previous trading day's closing price of SK Square was 1,501,000 won.
The previous day, some media reported that SK hynix is reviewing shareholder returns totaling 100 trillion won. In response, SK hynix disclosed that it is reviewing various measures to enhance shareholder value but has not finalized a specific size.
Choi Gwan-soon, an analyst at SK Securities, said that regardless of the actual size, the likelihood of expanded shareholder returns is high. Choi explained, "SK hynix has already raised its fixed dividends for 2025–2027 from 1,200 won per share to 1,500 won, and has said it will use 50% of the free cash flow (FCF) generated over three years as resources for shareholder returns."
Choi added, "Based on market consensus, SK hynix's FCF is expected to surge from 2.15 trillion won in 2025 to 14.6 trillion won in 2026 and 24 trillion won in 2027," saying, "With the expansion of FCF, the scale of shareholder returns is also likely to grow."
SK Square holds about 20% equity in SK hynix. Accordingly, an expansion of SK hynix dividends could immediately lead to increased dividend income for SK Square. Choi said, "SK Square has released plans for 200 billion won in cash dividends next year and a 40 billion won share buyback," and analyzed, "If SK hynix expands dividends, expectations for expanded shareholder returns by SK Square will also rise going forward."
Choi also assessed positively that institutional buying could continue. As SK hynix's market capitalization has surged, institutional investors face limits on single-stock inclusion. The Korea Financial Investment Association disclosed this month that SK hynix's KOSPI market cap weighting is 21.26%, which is lower than the actual weighting of 24.51%.
Choi said, "Buoyed by the issuance of American depository receipts (ADR) and expanded shareholder returns, SK hynix's stock is likely to continue rising," and projected, "Due to the gap between inclusion limits and actual weighting, institutional buying of SK Square could also persist."
Choi said, "In particular, beginning in 2026, SK hynix's earnings improvement is expected to directly benefit expanded shareholder returns," adding, "We are raising our target price to reflect the rise in subsidiary value."