SK Square closed at 1,041,000 won on the previous trading day, marking a sharp decline from its 52-week high of 2,189,000 won recorded on June 23. The investment holding company, which owns the largest stake in SK Hynix, has seen its stock price halve amid concerns over SK Hynix's profitability as Samsung Electronics enters the high-bandwidth memory (HBM) market. The stock fell to 770,000 won during intraday trading on July 30 before recovering above the 1 million won mark, though volatility continued with the stock dropping to 947,000 won on [the day before]. Brokerage firms have lowered their target prices for both SK Hynix and SK Square, citing reduced expectations for HBM operating margins. SK Square, which spun off from SK Telecom in 2021, derives the majority of its enterprise value from its SK Hynix holdings, making it highly sensitive to the semiconductor company's stock movements.
SK Square Stocks Fall to 1.04 Million Won from June Peak
According to Korea Exchange, SK Square closed at 1,041,000 won, up 60,000 won (6.12%) from the previous trading day. The stock remains less than half its 52-week high of 2,189,000 won set on June 23. SK Square's stock price started this year in the 200,000 won range and climbed steeply as the AI boom drew attention to SK Hynix's HBM business and SK Square's shareholder return policies, including share buybacks and cancellations, supported the rally. The stock subsequently entered a rapid correction phase as concerns emerged about SK Hynix's profitability. While AI memory demand remains solid, analysts note that Samsung Electronics' entry into the next-generation HBM market may reduce the high profit margins SK Hynix has enjoyed.
LS Securities Cuts SK Hynix Target to 2.4 Million Won
LS Securities maintained its 'Buy' rating on SK Hynix on July 31 while lowering its target price from 3.3 million won to 2.4 million won. The core reason for the downgrade was a change in 'excess profitability' outlook rather than weakening HBM demand. LS Securities initially expected SK Hynix's HBM operating profit margin to reach approximately 80% next year but revised the forecast to approximately 60%—similar to this year's level—after recent industry checks. Jeong Woo-sung, an analyst at LS Securities, noted that Samsung Electronics' entry into HBM4 may partially ease the premium associated with supplier concentration. The analyst explained that if HBM operating margins rise to 80%, Nvidia would need to raise product prices further to maintain its gross profit margin of approximately 75%, which could increase the server investment burden on big tech companies. LS Securities maintains a positive view on SK Hynix's HBM shipments and medium- to long-term demand, stating that how well the company maintains its technological edge and market share with major clients in next-generation products will be a key variable for the stock price.
NH Investment Lowers SK Square Target to 2.28 Million Won
NH Investment & Securities lowered SK Square's target price from 2.7 million won to 2.28 million won on [the 18th of last month], a reduction of approximately 15%. The adjustment reflects SK Hynix's recent stock price correction by raising the discount rate on SK Square's net asset value (NAV) from 25% to 40%. According to NH Investment, SK Square's enterprise value was calculated by combining approximately 49.7 trillion won in listed equity stakes including SK Hynix and Dreamers Company, plus approximately 4 trillion won in unlisted equity stakes including T Map Mobility, FSK, and CS T1. Applying a 40% discount rate yielded a per-share value of 2,280,705 won. NH Investment noted that the recent correction may be ending and a rebound phase could begin. Considering the growth of Neo Cloud companies, AI infrastructure demand remains solid, and if SK Hynix's shareholder return policy is disclosed, investment sentiment across the semiconductor sector could recover. If SK Hynix's dividend per share expands to 13,600 won, the dividend income received by largest shareholder SK Square is estimated to reach approximately 2 trillion won. SK Square paid a dividend of 1,500 won per share, totaling 204.3 billion won, in June and plans share buybacks of 40 billion won this year and 70 billion won next year.
FAQ
What caused SK Square stocks to fall from 2.18 million won to 1.04 million won?
SK Square stocks declined due to concerns over SK Hynix's profitability as Samsung Electronics enters the HBM market. The stock fell from its 52-week high of 2,189,000 won on June 23 to 1,041,000 won on the previous trading day, with brokerage firms lowering target prices based on reduced HBM operating margin forecasts.
Why did LS Securities lower its SK Hynix target price on July 31?
LS Securities cut SK Hynix's target price from 3.3 million won to 2.4 million won on July 31 because it revised its forecast for HBM operating profit margins from approximately 80% to approximately 60% next year. The firm cited Samsung Electronics' HBM4 entry as a factor that may partially ease supplier concentration premiums.
How much dividend income could SK Square receive from SK Hynix?
If SK Hynix's dividend per share expands to 13,600 won, SK Square as the largest shareholder is estimated to receive approximately 2 trillion won in dividend income. SK Square itself paid 1,500 won per share in dividends in June and plans share buybacks of 40 billion won this year and 70 billion won next year.
