SK Group surges in market cap

By Lee Min-hyung

SK Group’s stock value has been surging rapidly in recent years — driven by robust performance from key affiliates SK hynix, SK Telecom and SK Innovation.

The nation’s second-largest conglomerate has particularly seen a steep growth in its stock value this year, surpassing that of Hyundai Motor Group this April. The stock value for SK affiliates topped 120 trillion won ($151 billion) last month, a whopping growth from 76 trillion won as of the end of 2015. The dominant leader is Samsung Group whose market capitalization hovered above 360 trillion won last month.

Most noteworthy is a steep growth of SK hynix. The chipmaker is SK Group’s key revenue generator whose market capitalization nears 47 trillion won.

This is twofold growth in less than a year. The surging corporate value is attributable to the booming chip industry, resulting in the firm’s increased sales of NAND flash and DRAM memory chips. The former is used for mobile devices and the latter is a crucial part for computers.

This is because demands for chips with higher storage continues to grow for data centers and other emerging tech areas such as big data, artificial intelligence and connected vehicles.

Backed by the soaring chip demand, the company posted a record operating profit of 3.05 trillion won in the second quarter, up 573 percent from a year ago. The company also reported 45.59 percent in operating profit ratio, becoming the nation’ s most profitable firm among those listed on the benchmark KOSPI.

The firm’s outlook also remains rosy, as the memory chip market is expected to grow in a few more quarters to come.

“SK hynix is expected to chalk up 3.83 trillion won in operating profit in the third quarter, driven by peak season demand for DRAMs,” Do Hyun-woo, an analyst from Mirae Asset Daewoo Securities, said. “The outlook for NAND flash chips also remains rosy, with major smartphone vendors set to launch high-storage devices in the third quarter.”

SK Telecom is also another cash cow of SK Group, holding a strong foothold as the nation’s top mobile carrier. The company holds more than 44 percent in the nation’s wireless telecom market share with a wide gap from the 25 percent of runner-up KT.

In the second quarter, SK Telecom reported 423.3 billion won in operating profit, up 3 percent from a year earlier. The company attributed the growth to its ongoing portfolio diversification into non-telecom sectors including the internet of things (IoT).

As of Thursday, the company topped 21.6 trillion won in market capitalization the second-largest arm of SK Group following SK hynix.

SK Innovation, the chemical and battery products manufacturer of SK Group, is also driving up SK Group’s stock value, continuously diversifying its business portfolio focusing on value-added petroleum products and batteries. The company is valued at 15.9 trillion won in market capitalization.

Earlier this month, the company underwent a major reshuffle in its business structures to focus on its two next growth areas.