SK Square nearly triples as SK hynix stake drives rally

SK Square headquarters in central Seoul (SK Square)

SK Square shares have nearly tripled this year as investors reassess its value as the largest shareholder of SK hynix and a key pillar of SK Group’s semiconductor push.

SK Square shares closed at 991,000 won ($670) on Monday, up 17.84 percent from the previous session. During intraday trading, the stock climbed as high as 998,000 won, nearing the 1 million won threshold. Rising from 368,000 won on Jan. 2, the stock has surged 169.29 percent year-to-date.

The sharp rally has lifted the company’s market capitalization to 130.77 trillion won ($88.5 billion), making it the country’s third-largest listed company, excluding preferred shares, surpassing LG Energy Solution at 110.45 trillion won and Hyundai Motor at 110.36 trillion won.

It now trails only semiconductor giants Samsung Electronics and SK hynix, which are valued at 1,359.26 trillion won and 1,031.28 trillion won on the market, respectively.

SK Square's recent upswing comes on the back of strong gains in its chipmaking affiliate SK hynix. It is the largest shareholder of the chipmaker, holding a 20.5 percent stake.

SK hynix shares have surged 122.27 percent year-to-date, rising from 651,000 won to 1.45 million won and pushing the chipmaker’s market capitalization above 1 quadrillion won.

As SK Square holds a sizable stake in the company, investors expect it to benefit from the sharp increase in the value of its holdings in the chipmaker.

Pension funds are also expected to further increase exposure to SK Square as they rebalance their portfolios, while trimming holdings in SK hynix amid the chipmaker’s sharp stock rally and rising portfolio concentration risk.

Having reshaped its portfolio around semiconductors, SK Square is expected to spearhead SK Group’s chip-focused strategy, including leading the group's potential mergers and acquisitions across the semiconductor value chain, analysts said.

Meanwhile, SK Square remains undervalued relative to its holdings. With its SK hynix stake alone valued at roughly 200 trillion won, SK Square’s net asset value discount stood at 42.4 percent as of late April.

"SK Group’s expansion in the semiconductor sector could center around SK Square," said Ahn Jae-min, an analyst at NH Investment & Securities.

"The company’s aggressive shareholder return policies have also supported the stock’s strong momentum."