[Click eStock] "SK, Expanding Price Merit... Focus on Dividend Yield & SK Biopharm"

[Asia Economy Reporter Oh Ju-yeon] KB Securities on the 11th downgraded the target price for SK from the previous 320,000 KRW to 265,000 KRW, but analyzed that the price merit has greatly expanded due to this year's stock price decline, securing an upside potential of 46.8% compared to the recent closing price. The investment opinion was maintained as 'Buy.'

SK's stock price has fallen 31.1% since the beginning of this year, significantly underperforming the KOSPI return of 10.7% decline during the same period.

Researcher Jeong Dong-ik diagnosed, "Besides the market decline, the disappearance of momentum related to new drug sales approval, poor performance of major subsidiaries such as SK Innovation, lowered expectations for the value of SK Biopharm, and supply-demand issues following the completion of share buybacks are believed to have negatively affected the stock price." He added, "As major subsidiaries were hampered by various one-time costs, SK's consolidated operating profit for Q4 was only about half of the consensus, and net profit turned to a loss."

Due to this year's stock price decline, SK's stock is currently trading at a price-to-book ratio (PBR) of about 0.7 times based on the expected 2020 performance. This indicates that the valuation merit has greatly expanded.

Researcher Jeong said, "The merit from a dividend investment perspective has also greatly increased," adding, "SK's annual common stock dividend for 2020 is expected to increase by 1,000 KRW from 2019 to 6,000 KRW (1,000 KRW interim, 5,000 KRW year-end), which is about 3.3% compared to the previous day's closing price."

The concretization of SK Biopharm's IPO schedule is also expected to have a positive effect on the stock price. SK Biopharm passed the preliminary review for listing by the Korea Exchange on December 30 last year, making it highly likely to be listed in the first half of this year.

Researcher Jeong mentioned, "SK has established a principle to return investment profits to shareholders over several years in the form of special dividends when investment gains occur through IPOs or asset sales, and has promised this to investors," and predicted, "Accordingly, the concretization of SK Biopharm's IPO schedule is expected to positively affect SK's stock price, and depending on the scale of the special dividend, the dividend per share is also likely to increase."

This content was produced with the assistance of AI translation services.