SK Square crashes from W2.3m to 700,000 won, alarming investors as brokerages slash targets

"It kept going up every morning."

SK Square, whose share price had rivaled SK hynix in its meteoric rise, has suffered a dramatic collapse, leaving retail investors in an uproar.

After surging past 2.3 million won ($1,690) during intraday trading in June, SK Square plunged into the 700,000 won range before managing a partial rebound to close around 1.04 million won on Thursday. The stock remains roughly half its peak value.

The rally earlier this year had been extraordinary. Starting from around 200,000 won, the share price surged more than tenfold, breaking through the 2 million won mark. As the stock soared, retail investors piled in with the same fervor they had shown for SK hynix. Many are now reported to be stuck holding shares bought near the 2 million won peak.

"I'm completely ruined." "Should I just sell now?" Retail investors have been venting their frustration as the share price collapsed.

SK Square is the holding company for SK hynix, spun off from SK Telecom in 2021. Its surge this year was driven by an aggressive shareholder return policy — including share buybacks and cancellations — and a sharp rise in SK hynix's share price, which accounts for the bulk of SK Square's asset value.

Investors hoping for a rebound were dealt another blow by a jarring research report. LS Securities made the unusual move of slashing its target price for SK hynix from 3.3 million won to 2.4 million won, and cut its SK Square target sharply as well.

The brokerage warned that Samsung Electronics' push into HBM and supply chain diversification could weigh on SK hynix's profitability.

LS Securities said it had previously forecast SK hynix's HBM operating profit margin for next year to climb to around 80 percent, but that a recent industry review suggests it will remain at roughly 60 percent — in line with this year's level.

The firm said the target price cut "reflects a downward revision to HBM earnings forecasts, as the outsized HBM profitability we had assumed for next year is not materializing — not a slowdown in HBM demand or the end of the memory chip cycle." It added that the revision also factors in the possibility that Samsung Electronics' entry into HBM4 could partially erode the premium SK hynix commands as the dominant supplier.

NH Investment also lowered its target price for SK Square — SK hynix's largest shareholder — by 15 percent, from 2.7 million won to 2.28 million won. The brokerage said the industry outlook remains positive, but that SK Square's share price has already undergone one round of correction amid concerns that SK hynix's operating profit may have peaked. It said it raised the discount rate applied to SK Square's net asset value to reflect SK hynix's share price decline over the past month, resulting in the lower target.

Both brokerages nonetheless projected that SK Square would recover more sharply than SK hynix itself when share prices eventually rebound.

park@heraldcorp.com