SK Hynix stock costs $1,248 a share in Korea. Will it follow Samsung with a split?

SK Hynix closed Friday at 1,730,000 won ($1,248), up 2.31%. The closing price puts SK Hynix firmly in what Korean investors call "emperor stock" territory, which is the informal label for a share priced above 1 million won. It also revived a question that has returned to the Korean financial press this week. Should SK Hynix follow Samsung Electronics and make each share more affordable through a stock split?

SK Group chairman Chey Tae-won says he isn't against a stock split. Asked about it by reporters at SK Hynix's Nasdaq listing event in July, he said, "If more requests come in, I'll of course consider it," adding that he had not yet received a formal report on the matter. SK Hynix's own CEO, Kwak No-jung, has taken a more guarded tone. On several occasions, including within the past year, the SK Hynix CEO has said the company has no immediate plan to split its shares. Neither executive's remarks have led to a board resolution or corporate announcement.

The latest speculation follows another major shareholder action. This month, SK Hynix began the 40 trillion won ($28.6 billion) share-buyback and cancellation program approved by its board. The plan has already helped lift the stock.

The price is real. So is the history.

A year ago, only four stocks on the Kospi traded above a million won. That number is now nine, and SK Hynix sits alongside Samsung Biologics, Samsung Electro-Mechanics, Samyang Foods, Doosan, Korea Zinc, Hanwha Aerospace, Hyosung Heavy Industries and SK Square, which owns about a fifth of SK Hynix itself. SK Hynix has gone further than most, touching an all-time high near 2,980,000 won ($2,149) earlier this year, high enough that some in the market call it a "luxury stock" rather than just an emperor one.

Uhm Su-jin, an analyst at Hanwha Investment & Securities, says the price itself is the problem. "When one share costs hundreds of thousands or millions of won, it's a real burden for individual investors to buy," she said. Heo Jae-hwan, an analyst at Eugene Investment & Securities, said any benefit could be temporary. "A stock-split event can have a temporary effect of lifting the price for a while," he said.

Temporary is the word to sit with. Samsung's 2018 split cut its stock 50 to 1, from around 2,500,000 won ($1,803) down to the 53,000 won ($38) range, and trading volume rose more than 100-fold on the first day. Then the price kept falling anyway, back into the 30,000 won ($22) range by the end of that year. Naver's 5-for-1 split that year reset its share price to about 140,000 won ($101). On a split-adjusted basis, the stock did not regain its pre-split level until the following August.

An unnamed industry official summed up the skeptical case. "What moves the stock isn't the wrapping paper of a stock split. It's the company's growth potential, its profits, and how it distributes that to shareholders," the official said. Lee Jae-won, an analyst at Yuanta Securities who has been quoted on SK Hynix's shareholder-return plans before, made the same point from the other direction. "I hope they announce a shareholder-return policy strong enough to actually satisfy investors," he said, treating the payout, not a split, as the thing actually worth watching.

For now, nothing is decided. By Chey's own account, the company is still waiting to see how many more people ask.