Plans for South Korean chipmaker SK Hynix to list shares on the Nasdaq are generating optimistic projections, with analysts from HSBC suggesting a potential 20% increase in the company’s stock value. This announcement follows regulatory filings indicating that SK Hynix seeks to raise approximately $29 billion on the tech-heavy exchange by issuing American depositary receipts (ADRs).
In a note released Thursday, HSBC analysts remarked on the anticipated valuation uplift, applying a 20% premium to the chipmaker’s ADR listing, which is set for July 10. Currently, SK Hynix has priced its ADR filing at 255,000 won, equivalent to around $166 per share; however, this pricing may fluctuate as the company draws nearer to the offering date.
Historically, Micron Technology, a U.S.-based competitor, has traded at an average premium of 35% over SK Hynix for the past 13 years. Analysts attribute this discrepancy to Micron’s superior access to U.S. investors, a more favorable approach towards shareholders, and a higher beta stemming from a smaller earnings base. In light of the upcoming ADR listing, HSBC has revised its valuation approach for SK Hynix, adjusting the price-to-book ratio from 2.8x to 3.4x. This change reflects expectations for enhanced shareholder-friendly actions and increased accessibility for global investors.
The analysts view the U.S. listing as a crucial factor in helping SK Hynix close the valuation gap with Micron. Consequently, they have raised their price target for SK Hynix shares from 2.9 million Korean won to 4 million won, marking a 38% increase.
In terms of market activity, SK Hynix shares have experienced notable volatility, similar to the broader trends observed in Korea’s Kospi index. As of the latest trading session, the stock was spotted at 2.63 million won, down 8% amid a global tech sell-off. This decline followed a 12% surge on Thursday, driven by the announcement of its impending U.S. listing and stronger-than-expected quarterly results from Micron, which positively impacted the sector as a whole.
Micron’s quarterly performance reinforced predictions that the market for artificial intelligence memory chips is facing supply constraints, a particularly encouraging sign for SK Hynix. Rolf Bulk, head of semiconductors and infrastructure at Futurum Group, noted that SK Hynix is positioned similarly within the market dynamics.
In a regulatory filing made on Wednesday, SK Hynix stated plans to issue 17.79 million new shares at a total value of 45.45 trillion won, approximately $29.65 billion. While the company anticipates commencing trading on July 10, it flagged that this date could be subject to adjustments.
The firm expressed confidence that the ADR listing will broaden its investor base, facilitating a more accurate evaluation of its corporate value. “We expect to elevate our status as a global company by broadening our touchpoints in the United States, the epicenter of AI technological innovation,” stated SK Hynix in the regulatory filing.
