[Click eStock] "SK Square, Confirming Sincerity in Enhancing Corporate Value... Target Price Up"

On the 22nd, SK Securities raised the target price of SK Square from 94,000 KRW to 105,000 KRW, stating that the sincerity of enhancing corporate value has been confirmed. The investment opinion was maintained as 'Buy.'

SK Square decided to cancel 1,201,904 treasury shares held as of the previous day. These shares were acquired through trust contracts from April to September and account for 0.9% of the total issued shares. The cancellation is scheduled for January 6 next year, and upon completion, the cumulative total of 410 billion KRW worth of treasury shares will have been canceled since 2023. Additionally, from November 25 this year to February 24 next year, SK Square plans to acquire new treasury shares worth approximately 100 billion KRW, totaling 1,253,132 shares (0.9%).

SK Square also announced a corporate value enhancement plan the previous day. The plan aims to achieve a return on equity (ROE) exceeding the cost of equity (COE) from 2025 to 2027, targeting a discount rate to net asset value (NAV) of 50% or less and a price-to-book ratio (PBR) of 1 or higher by 2027. To this end, it will be introduced as a key performance indicator (KPI) for core management, strengthen portfolio profitability, and seek investment opportunities in the semiconductor AI sector. Next year, it is expected that a special dividend from SK Hynix (5% of free cash flow) and 450 billion KRW from the sale of SK Shieldus shares will be received.

Researcher Choi Gwansoon stated, "The cancellation of treasury shares held and the acquisition of new treasury shares have increased trust in the shareholder return policy," adding, "There is also a high possibility of additional treasury share buybacks and cancellations in 2025."

Researcher Choi explained, "The sincerity of enhancing corporate value has been confirmed through continuous treasury share buybacks and cancellations since 2023," and "Therefore, the discount rate applied to NAV when calculating the target price has been lowered from 60% to 55%, raising the target price from 94,000 KRW to 105,000 KRW."

He also added, "Since a still conservative valuation has been applied compared to other holding companies (target discount rate of 50%), there is sufficient room for stock price appreciation."

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