SK Has ‘Barely Begun’ on Shareholder Returns, Yuanta Says

Yuanta Securities said Aug. 21 that it expects SK Inc. to increase shareholder returns as the value of its subsidiaries rises and cash flow improves. The brokerage maintained a buy rating and its target price of 830,000 won ($598).

Lee Seung-woong, an analyst at Yuanta Securities, wrote that the sale of SK Siltron has brought the company’s balance-sheet improvement close to completion. He added that revenue growth and profit gains across SK’s semiconductor- and artificial intelligence-focused subsidiaries should continue over the medium to long term.

SK reported second-quarter consolidated revenue of 42.1 trillion won ($30.3 billion), up 39.9% from a year earlier. Operating profit surged 2,204.8% to 4.8 trillion won ($3.46 billion). Strong semiconductor performance and improved profitability in SK Innovation’s petroleum and base oil lubricant businesses drove the results. SK ecoplant also sustained strong growth, posting revenue of 5.2 trillion won ($3.74 billion) and operating profit of 533.6 billion won ($384 million).

Lee said the real story begins next year, forecasting a longer-term expansion in shareholder returns.

He cited SK Telecom’s resumption of quarterly dividends, dividend income flowing to SK Square from a special dividend at SK Hynix, and the possibility that SK ecoplant could resume shareholder returns. Brand royalty income will likely rise from 424 billion won ($305 million) this year to 1.1 trillion won ($792 million) next year and 1.6 trillion won ($1.15 billion) in 2028, he said.

Kim Yeon-ji, Hankyung.com reporter kongzi@hankyung.com