A view of the SK Square headquarters. SK Square
SK Square (402340.KS), the largest shareholder of SK hynix (000660.KS), surged more than 5% during intraday trading. The move is attributed to growing expectations for expanded shareholder returns, which highlighted potential dividend gains and inflows of institutional buying.
According to the Korea Exchange on Monday, SK hynix was trading at 2.397 million won, up 13,000 won, or 0.55%, from the previous session. Meanwhile, SK Square, the largest shareholder of SK hynix, posted a larger gain, rising 81,000 won, or 5.40%, from the previous day to 1.582 million won.
SK Securities maintained its “buy” rating on SK Square on the same day and raised its target price to 1.85 million won from 1.45 million won. The brokerage cited that the company will become a direct beneficiary of expanded shareholder returns driven by SK hynix’s earnings improvement, which is set to gain momentum this year.
Analysts are focusing on the direction of SK hynix’s shareholder return expansion. SK hynix earlier raised its fixed dividend for 2025-2027 to 1,500 won per share from 1,200 won, and unveiled a policy to use half of the free cash flow (FCF) generated over the three years as a source for shareholder returns.
SK hynix’s cash-generating capacity is also expected to improve rapidly, boosted by expanding demand for artificial intelligence (AI) memory. Based on the consensus, FCF is projected to grow from 21.5 trillion won this year to 146 trillion won next year and to 240 trillion won in 2027. This is interpreted to mean that as cash generation grows, the capacity for shareholder returns, such as dividends and share buybacks, can expand as well.
In particular, SK Square holds about a 20% stake in SK hynix, so it is expected to be a direct beneficiary of dividend expansion. If SK hynix increases its dividends, SK Square’s dividend income will also rise, which is likely to be used in turn as a source for SK Square’s own dividend expansion or share buybacks. “Even though the specific scale has not been confirmed, expectations for expanded shareholder returns remain valid,” said Choi Kwan-soon, a researcher at SK Securities.
Analysts also say the institutional supply-and-demand situation is positive. As SK hynix’s market capitalization has surged recently, some institutional investors face single-stock holding-cap regulations. By contrast, SK Square, which holds a stake in SK hynix, is being highlighted as an alternative investment that can benefit from the rise in hynix’s value. “Due to the gap between the holding cap and the actual weighting, institutional investors’ buying of SK Square is also likely to continue,” Choi forecast.
