Key Takeaways
- • Daishin Securities raised SK Square's target price by 36% to 760,000 won on April 25, maintaining a "Buy" rating, citing the holding company as an attractive alternative to direct SK hynix exposure amid regulatory investment limits.
- • SK hynix exceeded 10% market-capitalization weighting in Korea's equity indices as of October 2025, triggering the Korea Financial Investment Association's single-stock inclusion limit for institutional funds, creating structural demand for SK Square as a workaround vehicle.
- • Korea Investment & Securities lifted SK hynix's target price to 2.05 million won (highest in the securities industry) on April 24, driven by first-quarter results showing 198% revenue growth to 5.26 trillion won and 405% operating profit surge to 3.76 trillion won.
- • SK hynix's first-quarter gross margin reached 79% and operating margin 72%, reflecting structural supply constraints and long-term agreements (LTA) expansion that analysts expect will sustain the semiconductor upcycle longer than historical cycles.
- • The KOSPI set an intraday record high on April 27 with SK hynix shares reaching 1.28 million won (a new record), as earnings-driven momentum in semiconductors and AI-related power equipment stocks extended the institutional buying rally.
Summary
Daishin Securities elevated SK Square's investment case on April 25 by raising its target price 36% to 760,000 won, maintaining a "Buy" rating as the holding company emerges as a critical alternative to direct SK hynix investment. SK Square, the largest shareholder of SK hynix with approximately 20% ownership, generated 1.4 trillion won in revenue in the prior year with operating profit of 8.8 trillion won—up 124% year-over-year, driven largely by equity-method gains from SK hynix's exceptional performance. According to Daishin researcher Kim Hoe-jae, SK Square's discount to net asset value (NAV) narrowed to a record low of 45% in February 2026, from 56% in August 2025, reflecting improved investor recognition of the arbitrage opportunity.
The structural driver behind SK Square's appeal is Korea's 10% single-stock inclusion limit for equity funds. As SK hynix's market capitalization weight exceeded 10% in October 2025, institutional funds faced binding regulatory constraints on further direct accumulation. The Korea Financial Investment Association began monthly adjustments to SK hynix's index weighting, but with the sharp share-price rally, a material gap has emerged: the association's February 2 weighting reflected 13.9% (based on January averages), while SK hynix's actual market-cap weight reached 15.0% by late April. This regulatory friction has positioned SK Square as the primary vehicle for institutional capital seeking exposure to SK hynix's semiconductor upside without triggering concentration limits.
SK hynix's operational results validated the bullish thesis, with Korea Investment & Securities raising its target price to 2.05 million won on April 24—the highest target in the securities industry. First-quarter 2026 revenue jumped 198% year-over-year to 5.26 trillion won, setting a quarterly record, while operating profit surged 405% to 3.76 trillion won. Average selling prices (ASP) for both DRAM and NAND rose by mid-60% and mid-70% respectively from the prior quarter, with gross margin expanding to 79% and operating margin to 72%. Korea Investment & Securities analyst Chae Min-suk attributed this strength to structural memory demand growth outpacing near-term supply capacity, with long-term agreements (LTA) expansion improving demand predictability and investment returns while reducing historical cyclicality in the memory sector.
Market momentum accelerated on April 27, with the KOSPI setting an intraday record high of 6,560 points, driven by semiconductor strength and AI-related industrial demand. SK hynix shares surpassed 1.28 million won, marking a new all-time high, while the broader institutional buying environment reflected confidence in semiconductor earnings visibility. Pension funds and institutional investors were net buyers across both the KOSPI and KOSDAQ, signaling institutional repositioning into the memory chip upcycle amid global supply constraints and structural demand drivers including artificial intelligence deployment.
The structural driver behind SK Square's appeal is Korea's 10% single-stock inclusion limit for equity funds. As SK hynix's market capitalization weight exceeded 10% in October 2025, institutional funds faced binding regulatory constraints on further direct accumulation. The Korea Financial Investment Association began monthly adjustments to SK hynix's index weighting, but with the sharp share-price rally, a material gap has emerged: the association's February 2 weighting reflected 13.9% (based on January averages), while SK hynix's actual market-cap weight reached 15.0% by late April. This regulatory friction has positioned SK Square as the primary vehicle for institutional capital seeking exposure to SK hynix's semiconductor upside without triggering concentration limits.
SK hynix's operational results validated the bullish thesis, with Korea Investment & Securities raising its target price to 2.05 million won on April 24—the highest target in the securities industry. First-quarter 2026 revenue jumped 198% year-over-year to 5.26 trillion won, setting a quarterly record, while operating profit surged 405% to 3.76 trillion won. Average selling prices (ASP) for both DRAM and NAND rose by mid-60% and mid-70% respectively from the prior quarter, with gross margin expanding to 79% and operating margin to 72%. Korea Investment & Securities analyst Chae Min-suk attributed this strength to structural memory demand growth outpacing near-term supply capacity, with long-term agreements (LTA) expansion improving demand predictability and investment returns while reducing historical cyclicality in the memory sector.
Market momentum accelerated on April 27, with the KOSPI setting an intraday record high of 6,560 points, driven by semiconductor strength and AI-related industrial demand. SK hynix shares surpassed 1.28 million won, marking a new all-time high, while the broader institutional buying environment reflected confidence in semiconductor earnings visibility. Pension funds and institutional investors were net buyers across both the KOSPI and KOSDAQ, signaling institutional repositioning into the memory chip upcycle amid global supply constraints and structural demand drivers including artificial intelligence deployment.
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