SK Square (402340) has shattered the 130 trillion won (approximately $89.2 billion) market capitalization threshold, cementing its position as the third-largest company on South Korea’s main KOSPI exchange, driven by the semiconductor super cycle and an aggressive shareholder return policy. With its stock price now within striking distance of 1 million won per share, market observers say the countdown to “emperor stock” status has officially begun.

According to the Korea Exchange on May 5, SK Square shares surged 17.84% from the previous session to close at 991,000 won on May 4. At one point during intraday trading, the stock spiked to 998,000 won, coming within a hair’s breadth of the 1 million won mark. The company’s closing market capitalization stood at 130.77 trillion won (approximately $89.7 billion), significantly outpacing LG Energy Solution (373220) at 110.45 trillion won and Hyundai Motor (005380) at 110.36 trillion won.

The stock, which started the year at 368,000 won, has skyrocketed roughly 192% through early May — nearly tripling in value since the beginning of the year. Notably, while SK Hynix (000660) shares climbed 59.36% last month, SK Square surged 80.28%, outperforming its subsidiary by a wide margin. During this period, institutional investors net purchased 303.1 billion won (approximately $207.9 million) worth of SK Square shares, fueling the rally.

The primary catalyst behind the explosive gains is the blistering growth of SK Hynix. SK Square is the largest shareholder of SK Hynix with an approximate 20% equity stake. SK Hynix posted a consolidated first-quarter operating profit of 37.61 trillion won (approximately $25.8 billion), achieving a staggering 72% operating margin, as explosive demand for high-performance memory chips — particularly High Bandwidth Memory (HBM) — driven by expanding AI infrastructure investment propelled its performance. Buoyed by these results, SK Hynix shares closed at 1.447 million won on May 4, pushing its market capitalization to 1,031.28 trillion won (approximately $707.4 billion) and breaching the 1,000 trillion won milestone for the first time in its history.

As SK Hynix’s market cap surged into the quadrillion-won territory, institutional investors bumping up against the single-stock 10% holding limit for equity funds increasingly turned to SK Square as an alternative, emerging as another key driver of the share price rally. “SK Square’s smaller market capitalization weight compared to SK Hynix presents a favorable supply-demand dynamic, as it is relatively easier for benchmark-tracking institutional investors to increase their allocation,” analyzed Ahn Jae-min, an analyst at NH Investment & Securities.

The company’s aggressive shareholder return policy further enhances its investment appeal. Since announcing its shareholder return policy in March 2023, SK Square has consistently repurchased treasury shares at a scale significantly exceeding 30% of its annual recurring dividend income. This year, the company plans a total shareholder return of 310 billion won (approximately $212.6 million), comprising 210 billion won in treasury share cancellations and 200 billion won in cash dividends. Market observers note that a virtuous cycle has taken hold, where dividend inflows from SK Hynix are channeled back into shareholder returns.

Furthermore, SK Square is evolving beyond a conventional holding company into an AI and semiconductor-centric investment holding company. Through its overseas investment arm TGC Square, it has invested in U.S.-based companies including Hammerspace, an AI data bottleneck solution provider, and d-Matrix, an AI semiconductor design firm. In Japan, it is actively sourcing semiconductor materials, components, and equipment companies such as iocore and LinkUs.

The net asset value (NAV) discount rate is also improving rapidly. The discount, which stood at a steep 65.7% at the end of 2024, has narrowed to 42.4% as of the end of last month, signaling that the market is beginning to more fairly assess SK Square’s corporate value.

Securities firms are successively raising their target prices above 1 million won, essentially treating the emperor stock milestone as a foregone conclusion. NH Investment & Securities raised its target from 740,000 won to 1.1 million won, while Daishin Securities lifted its target from 760,000 won to 1 million won. “SK Hynix’s earnings growth will translate into higher dividends, significantly contributing to improved cash flows at SK Square,” said analyst Ahn. “Abundant financial resources will, in turn, fuel expanded shareholder returns and M&A investments related to the semiconductor industry, establishing a virtuous cycle that continuously enhances corporate value.”

Meanwhile, the KOSPI index also surged to a record high, closing up 338.12 points, or 5.12%, at 6,936.99, propelled by the semiconductor stock rally. Samsung Electronics (005930) rose 5.44% to 232,500 won, hitting a 52-week high, while SK Hynix skyrocketed 12.52% to 1.447 million won. The combined market capitalization of the two stocks reached approximately 2,390 trillion won (approximately $1.6 trillion), accounting for a record 42.2% of the total KOSPI market cap.

The secondary battery sector also showed signs of a rebound. Amid growing expectations for Energy Storage System (ESS) demand driven by expanding AI infrastructure investment, Samsung SDI (006400) has surged nearly 165% this year, while LG Energy Solution and SK Innovation gained 13.1% and 27.7%, respectively. Analysts anticipate the secondary battery industry is moving past a phase of slowing electric vehicle (EV) demand and entering a gradual recovery period, with demand shifting particularly toward ESS as a foundation for earnings improvement.

Market consensus overwhelmingly points to SK Square’s imminent coronation as an emperor stock. “SK Square’s market cap first surpassed 100 trillion won on April 27, becoming the fifth company in South Korea to reach that milestone,” noted Kim Hoe-jae, an analyst at Daishin Securities. “With a market cap of 1.2 trillion won per employee based on 84 employees, it ranks at the absolute top domestically.” However, some caution that alongside the potential for short-term profit-taking following the steep rally, risks tied to semiconductor cycle volatility persist given SK Square’s near-absolute dependence on SK Hynix’s performance.