[Click e-Stock] "SK Square Improving Subsidiaries' Fundamentals" Target Price Raised

On May 20, DB Securities raised its target price for SK Square from 99,000 won to 118,000 won, stating that the company is "improving the fundamentals of its subsidiaries." SK Square is an intermediate holding company within the SK Group. In its governance structure, SK holds a 31.5% stake in SK Square, and SK Square in turn controls SK Hynix, 11st, Tmap Mobility, and others.

Based on SK Square's consolidated financial statements, first-quarter revenue was 402.8 billion won, a decrease of 19.2% year-on-year. However, operating profit surged by 410.3% to 1.7 trillion won, mainly due to an increase in equity-method earnings from SK Hynix. In particular, the profitability of key consolidated subsidiaries is improving. 11st has reduced its deficit by reorganizing its direct purchase product lineup and improving its cost structure. Tmap Mobility, despite a 12.6% year-on-year decline in revenue due to the sale of subsidiaries and the discontinuation of low-profit businesses, has continued to record a small net profit.

Since 2023, SK Square has been carrying out share buybacks and cancellations totaling approximately 500 billion won. DB Securities forecasts that SK Square will continue to provide stable shareholder returns going forward. Shin Eunjeong, an analyst at DB Securities, stated, "In addition to net cash of 430 billion won, SK Square will recognize proceeds of 450 billion won from the remaining sale of SK Shieldus in July (excluding annual interest income of 7%), as well as 335 billion won in other dividends, resulting in a total of 1.2 trillion won available for shareholder returns and investment." She added, "Even after recognizing the remaining SK Shieldus sale proceeds in July, we expect SK Square to conduct an additional share buyback of more than 100 billion won."

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