[Click eStock] Upcoming Governance Restructuring... SKT Stock Price Rise Expectations Up↑

An Opportunity to Properly Recognize Subsidiary Value... Corporate Value Rises Over 30% Above Current Market Cap

Park Jung-ho, CEO of SK Telecom, is presenting management performance and vision to shareholders at the 37th regular general meeting of shareholders held on the 25th at the T Tower headquarters in Euljiro, Seoul.
[Photo by Yonhap News]

[Asia Economy Reporter Minwoo Lee] SK Telecom is expected to complete its split and re-listing within the year through a corporate governance restructuring. Analysts suggest that this will allow the subsidiary companies to be properly valued and enable stock price growth.

On the 26th, NH Investment & Securities maintained a 'Buy' rating on SK Telecom, reflecting expectations for the upcoming corporate split, and raised the target price by 3% to 340,000 KRW. The closing price the previous day was 253,500 KRW.

Earlier, SK Telecom CEO Jung-ho Park announced at the shareholders' meeting that the company would pursue corporate governance restructuring within the year. SK Telecom is expected to transform into a holding company and its subsidiaries in telecommunications, media, security, and commerce will individually attract investments to maximize corporate value. Jaemin Ahn, a researcher at NH Investment & Securities, explained, "The spin-off of SK Telecom provides an opportunity to simultaneously attract investors seeking stable dividend yields from SK Telecom and those interested in the growth potential of the information and communication technology (ICT) business," adding, "It will be an opportunity for the currently undervalued SK Telecom subsidiaries to be properly recognized."

NH Investment & Securities projected the combined value of SK Telecom after the split to be 27.3 trillion KRW, which is more than 30% higher than the current market capitalization (20.4689 trillion KRW as of the previous day). They estimated the telecommunications business value of SK Telecom, including the wireless business, SK Broadband, and treasury stock, at 13.7 trillion KRW, and SK Telecom Holdings at around 13.6 trillion KRW. Researcher Ahn predicted, "This will be the time when the values of subsidiaries such as SK Broadband, ADT Caps, 11st, WAVVE, T map Mobility, and One Store, which were not properly recognized due to being confined to a price-earnings ratio (PER) of 10 because of the telecommunications service industry, will be properly reflected."

This is also interpreted as a significant positive for shareholders. A spin-off that offers shareholders the option to own shares is more favorable to stock prices than a physical split. Considering the recently strengthening ESG (environment, social, governance) factors and the rights of minority shareholders, expectations for stock price increases are growing.

Researcher Ahn said, "Although situations vary by company, looking at cases of spin-offs in recent years such as Daelim Industrial (from 2.9 trillion KRW to 3.6 trillion KRW), Hyundai Development Company (from 3.5 trillion KRW to 4.4 trillion KRW), and Hyundai Heavy Industries (from 12.5 trillion KRW to 16.8 trillion KRW), the combined value rose on the first day of re-listing after the split," adding, "Especially in the case of DL, the stock price rose significantly as the chemical business, which was not properly valued before the split, was properly recognized. Similarly, SK Telecom Holdings will be able to have the value of its subsidiaries properly recognized after the split."

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