SK Hynix ADR listing imminent as net cash target of 100 trillion won comes into sight

Listing expected as early as next month after SEC approval; company topped Korean market cap rankings Monday

SK Hynix's application to list American depositary receipts in the United States is nearing completion, according to investment banking sources. While IB industry insiders are cautious about pinpointing an exact timeline, markets have already begun pricing in the anticipated ADR listing. On Monday, SK Hynix's common shares hit a market capitalization of 2,080 trillion won ($1.35 trillion), vaulting the chipmaker to the top spot on the Korean stock market.

The surging share price has also brought SK Hynix's goal of holding 100 trillion won in net cash — set at the start of the year — within reach. If the company issues new shares at the maximum level that still allows parent SK Square to meet its holding company requirements, analysts estimate more than 50 trillion won in fresh cash could flow in. With net cash standing at 35 trillion won at the end of the first quarter, hitting the target by year-end now appears feasible.

SK Hynix is targeting a listing as early as next month and is currently undergoing a review by the US Securities and Exchange Commission for its ADR listing, IB industry sources said Tuesday. The company confidentially submitted a Form F-1 registration statement in March, and the review is ongoing.

Although the SEC has yet to issue a decision, overseas institutional investors have shown a favorable appetite for SK Hynix. Earlier this month, the company returned from a non-deal roadshow with confirmation of strong investor expectations for growth in the memory chip market, centered on high-bandwidth memory.

Analysts also expect the valuation gap between SK Hynix and US rival Micron Technology to narrow. Micron closed at $1,211.38 per share on Monday, hitting a record high, with its forward price-to-earnings ratio hovering around 10 times.

SK Hynix has itself posted a sharp share price rally on the back of ADR listing expectations. Its common shares closed at 2,919,000 won on Monday, pushing it to the top of the Korean market by common-share market cap. Based on the recent price run, SK Hynix's forward PER stands at around nine times.

"SK Hynix's share price has risen quickly, but Micron's has climbed just as much," an IB industry official said. "From the perspective of overseas institutional investors, SK Hynix still offers an attractive valuation."

The flood of capital into the US initial public offering market is seen as another tailwind. SpaceX, which listed on the Nasdaq on June 12, raised $75 billion in what was the largest IPO in history. With AI model developers OpenAI and Anthropic also moving ahead with their own IPO processes, analysts expect investor appetite for mega deals to remain strong.

Given the strong investor interest, issuing a larger volume of new shares would also work in the company's favor as it seeks to boost its corporate valuation. The securities industry generally regards 2.5 percent of listed shares — approximately 17.8 million shares — as the maximum new issuance that would still allow parent SK Square to maintain a 20 percent stake. At the current share price of around 2.9 million won, that would enable the company to raise more than 50 trillion won.

That scenario would also allow SK Hynix to meet the cash reserve target it set at the start of the year. At the regular shareholders' meeting in March, SK Hynix CEO Kwak Noh-jung said the company aimed to secure more than 100 trillion won in net cash, adding that it would "execute long-term, strategic investments under any circumstances to maintain competitiveness." The strategy is to accumulate 100 trillion won as a stable foundation for semiconductor factory investment.

SK Hynix posted net profit of more than 40 trillion won in the first quarter alone, bringing its net cash position to 35 trillion won at the end of March — a sharp increase from 12.69 trillion won at the end of last year. With net profit for the second quarter forecast to exceed 50 trillion won, analysts say reaching the 100 trillion won target by year-end should be well within reach once earnings and new share issuance are both factored in.

SK Hynix plans to channel much of the cash it accumulates into its Yongin cluster. Construction is proceeding at a rapid pace ahead of the first cleanroom becoming operational in February next year — about three months ahead of the original May schedule. The first fabrication plant will comprise six cleanrooms in total, and industry estimates put the cost of a single fab at between 120 trillion and 150 trillion won.

jeongwan@heraldcorp.com