[Click eStock] "SK Square, Excessive Decline Compared to Net Asset Value"

Significant Upward Momentum from Active M&A and Subsidiary IPOs

[Asia Economy Reporter Minwoo Lee] An analysis has emerged that the stock price of SK Square has fallen excessively compared to its net asset value (NAV) since it began trading as a new stock.

On the 3rd, NH Investment & Securities judged that SK Square's current stock price is somewhat undervalued. Following the spin-off from SK Telecom, SK Square resumed trading as a new stock from the 29th of last month, with an opening price of 82,000 KRW. The closing price on the previous day was 68,700 KRW, a drop of about 16.2% compared to the opening price.

This is interpreted as due to uncertain market conditions and initial supply and demand effects. It is explained that among investors who came to hold SK Square shares due to the spin-off, those who prefer stable, dividend-focused investments sold SK Square shares, which do not pay dividends immediately. Jaemin Ahn, a researcher at NH Investment & Securities, said, "From the listing date until the 1st, about 1.57 million shares were sold by foreign investors and about 1.21 million shares by domestic institutional investors. Although it is difficult to determine how much additional volume will be sold, since a large quantity was released into the market in a short period, the negative impact from supply and demand should have settled for now."

When compared to net asset value, the current stock price is seen as excessively undervalued. NH Investment & Securities calculated SK Square’s corporate value at an NAV of 24 trillion KRW and projected it at around 12 trillion KRW by applying the average holding company discount rate of 50%. As of the previous day, the market capitalization was 9.7188 trillion KRW, representing a 60% discount compared to NAV. Previously, SK Square announced a growth strategy targeting an NAV of 75 trillion KRW by 2025.

NH Investment & Securities viewed SK Square’s growth momentum as stemming from the IPOs and investment results of its subsidiaries. In addition to acquiring the cryptocurrency exchange Korbit and OnMind, it is expected to pursue M&A that can create synergy with affiliates such as SK Telecom and its subsidiaries (11st, Wavve, etc.). It is also anticipated to actively invest in semiconductor-related technology companies centered on SK Hynix. Researcher Ahn predicted, "Ultimately, the company will strive to grow based on investment-focused management rather than being a simple holding company."

He pointed out that the view that SK Square’s corporate value should be lowered to merge with holding company SK involves many logical leaps. Researcher Ahn explained, "CEO Jung-ho Park announced before the spin-off that there are no immediate plans to merge, and since the corporate value of holding company SK, which oversees the entire SK Group, rises along with SK Square’s value, it is not easy to intentionally suppress SK Square’s corporate value to raise holding company SK’s value. Also, with the recent emphasis on Environmental, Social, and Governance (ESG) management and SK Group Chairman Tae-won Chey serving as the chairman of the Korea Chamber of Commerce and Industry, such attempts are unlikely."

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