Key points
- SK Square, the holding company that owns about 20% of SK Hynix, rose 9.08% to 1,117,000 won ($787 USD) on August 13, more than SK Hynix itself (+5.92%).
- The move followed reports that SK Hynix is preparing a record shareholder return, put near 100 trillion won ($70.5B USD). SK Hynix hasn't confirmed a size.
- Most of what SK Square is worth is its SK Hynix stake, so a bigger payout there lifts the holding company too.
- Even after a 9% day, SK Square is about half its June 23 high, before the summer selloff.
On August 13, the Kospi closed above 6,800, up 3.56% for the day, and its first close that high in 15 trading days. It rose for a fourth day in a row, this time following an overnight rally in US chip stocks after American inflation for July came in as expected. The same two names did most of the work. SK Hynix (SK하이닉스) rose 5.92%, to 1,593,000 won ($1,122 USD), and Samsung Electronics (삼성전자) added 4.88%. Foreign investors did the buying, about 2.1 trillion won ($1.48B USD) of it, most in chip names.
Among the big names, the one that rose most on Wednesday was SK Square (SK스퀘어). It sits one level above SK Hynix in the SK group, and it rose 9.08%, to 1,117,000 won ($787 USD).
The company above SK Hynix
The ownership chain is short. SK Inc. (SK㈜) runs the group and sits at the top. Under it is SK Square, the middle holding company, and SK Hynix sits under that. SK Square owns about 20% of the chipmaker, and nobody owns more. I wrote last week about how the same line runs one step further down, to SK Hynix's Solidigm, and how four SK companies could end up listed at once.
Because the holding company is mostly its SK Hynix shares, the two stocks tend to move together. When SK Hynix has a strong day, SK Square usually has one too. On Wednesday it had a stronger one.
A payout with no number yet
SK Square's bigger move is about something narrower, a payout that hasn't been announced. SK Hynix is preparing a shareholder return that Korean outlets have put near 100 trillion won ($70.5B USD), made up of a share buyback of about 40 trillion won ($28.2B USD) and a cash dividend of about 60 trillion won ($42.3B USD). Those figures are reports, not the company's. SK Hynix announced a 375 won ($0.26 USD) quarterly dividend on August 7 and said it would settle the larger plan after its third-quarter results. If it lands near what the reports describe, it would be the biggest shareholder return the company has ever done.
A payout that size reaches SK Square in two ways. It collects the dividend on its SK Hynix shares, and the value of the stake itself, which is most of what the holding company is worth, moves with what SK Hynix is expected to pay and earn. That's part of why the holding company rose more than the company it holds.
There's a second reason. Holding companies in Korea usually trade below the value of what they own, a discount investors put on the structure. SK Square has been working to narrow its own, buying back and cancelling its shares and paying a cash dividend of its own. As SK Hynix's earnings have recovered this year, that discount has been closing, and Wednesday pushed it a little further.
None of this puts SK Square back where it was. It closed at 1,117,000 won ($787 USD), and even after a 9% day it's about half its intraday high near 2,100,000 won ($1,480 USD) from June 23, before the summer selloff pulled the whole market down. It also finished below its own high for the day, after being up more than 10% in the morning.
Meanwhile, the payout behind SK Square's bigger move still has no confirmed size. SK Hynix has said only that it will settle the plan after its third-quarter results, so for now SK Square rose on a number nobody has published yet.
Sources
- 이투데이, SK하이닉스 상승에 SK스퀘어, 10%대 급등…지분 가치 재평가 부각, on SK Square's rise and the re-rating of its SK Hynix stake
- 디지털데일리, 삼성전자·SK하이닉스가 끌어올린 코스피…3.56% 급등해 6813 마감, on the index close and the semiconductor rally
- 조세일보, SK하이닉스, '100조원대 주주환원' 이르면 이달 발표, on the expected size and timing of the shareholder return
- Our earlier coverage: the SK ownership chain from SK Inc. to Solidigm, SK Hynix's shareholder return plans
Figures are converted at about 1,419 won to the US dollar. Source titles are in the original Korean. This is general market commentary and not investment advice.
