SK Telecom and SK Square shares mixed on their first day of return after separation

Shares of South Korea’s largest wireless carrier SK Telecom Co. on Monday were warmly welcomed back to the Kospi bourse after a month-long suspension for business split while the new investment company SK Square debuted on a subdued note.

On Monday, SK Telecom shares rallied 8.43 percent to close at 57,900 won ($48.53) from the previous session, while SK Square fell 7.32 percent to end at 76,000 won.

SK Telecom finished at 309,500 won with a market cap of 22.3 trillion won on Oct. 25, its last trading day before its face value was cut to 100 won from 500 won from a 5-to-1 stock split as part of its separation of business into telecom unit SK Telecom and non-telecom business SK Square.

Major subsidiaries of new SK Telecom include SK broadband (with 74.3 percent), SK telink (with 100 percent) and F&U Credit Information (with 50 percent). SK Square oversees SK hynix (20.1 percent), 11st Street (80.3 percent), SK Shieldus (62.6 percent), T Map Mobility (66.3 percent) and One Store (47.5 percent).

SK Telecom shares are expected to be swayed by dividend payouts, according to market analysts.

“Considering its dividend payout ratio and capital expenditure, SK Telecom’s dividend payouts are estimated to decrease after 2022. But the company will be able to maintain its high market cap if the management vows to keep its return rate high in the long term,” said Kim Hong-sik, an analyst at Hana Financial Investment.

SK Telecom earlier announced a shareholder reward plan including a quarterly dividend program and payout level at 30-40 percent of the difference between the EBITDA and Capex for the next three years.

Shares of SK Square are expected to rely on the stock prices of its listed subsidiaries such as SK hynix, the IPO result of unlisted units including 11st Street and SK Shieldus, and future M&As.

“SK Square as an ICT investment firm will focus on improving its corporate value with dividend payouts and IPOs of its subsidiaries,” said Ahn Jae-min, an analyst at NH Investment & Securities. “With the IPO proceeds, it will further seek for additional investment opportunities for higher value.”

SK Square is also expected to attract more investors if its subsidiaries in commerce and mobility start generating profits, said Choi Nam-gon, an analyst at Yuanta Securities Korea.

Hana Financial Investment projected the market cap of SK Telecom and SK Square at 13-18 trillion won and 6-9 trillion won, respectively. Yuanta Securities Korea estimated their market cap each at 14-16 trillion won and 8-11 trillion won.

Separately, home-grown app market One Store under SK Square on Friday filed for a preliminary review for an IPO on Friday, with an aim to list its initial shares on the main Kospi by the first quarter of next year.

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