Align Partners discloses 1.5% stake in SK, estimates valuation discount at about 75%
Key Facts
Activist investment firm Align Partners Asset Management disclosed a 1.5% stake in South Korea's SK Group, Investing reported, citing Chosun Biz. The investor said the group's shares trade at a discount of nearly 75% to its underlying net asset value, which it estimates at about 100 trillion won. Align attributed part of the valuation gap to the ownership structure, which it described as imposing a "double discount". Under its explanation, SK Hynix's value is discounted at the intermediate holding company, SK Square. That value is then discounted again at the parent company, SK, making the investor's objection about how asset values are reflected across the group's ownership tiers.
The stake disclosure comes amid an existing SK value enhancement plan, which the company says it announced on 28 October 2024. The plan targets a price-to-book ratio of 0.7 times during 2024–2026, rising to 1.0 times from 2027. On profitability, the company set a return-on-equity target of 8% for 2024–2026. That target rises to 10% from 2027, according to the investor FAQ page on the company's website. The plan thus combines targets for the stock's valuation relative to its book value with targets for the return the group generates on shareholders' equity, with both moving to a higher level in the subsequent period.
The plan's official initiatives include investment portfolio rebalancing to improve its composition and achieve integration across the group's businesses, according to SK. In its presentation to shareholders, the company linked the improvement in its consolidated earnings to SK Hynix's record performance. The improvement came despite lower earnings and asset impairments at SK Innovation and SK Telecom, according to the same presentation. Its shareholder return policy links a gradual expansion in returns to stable, predictable base dividends alongside proceeds from asset sales. The company says this expansion is based on "stable and predictable base dividends and proceeds from asset sales", under its stated policy of returning funds to shareholders.
SK's policy sets a minimum annual cash dividend of 5,000 won per common share, according to shareholder information published on its website. The company's presentation to its annual general meeting showed a dividend per share of 8,000 won for fiscal 2025. That compared with 7,000 won per share for fiscal 2024, continuing the rise in dividends shown in the company's record. The dividend per share was 5,000 won in fiscal 2023, according to the presentation to shareholders. Dividends per share for fiscal 2024 and 2025 therefore exceeded the stated annual minimum for common shares, while the fiscal 2023 dividend matched that minimum.
On the use of treasury shares, SK's annual general meeting notice specifies the allocation of 3,288,098 shares for employee compensation. The company said in the notice that it intends to use shares from its existing treasury holdings for this purpose. In the market, Investing reported SK shares trading at 478,000 won in the price snapshot accompanying its report on Align's stake disclosure. The stock was up 11.68% in that snapshot, according to the website. Those prices appeared alongside the publication of the news of the activist investor's ownership and its estimate of the valuation gap between the company's shares and its underlying net asset value.
Align expects SK to announce a new corporate value enhancement plan before year-end, Investing reported, citing Chosun Biz. The activist investor sees the expected plan as a potential catalyst for narrowing the valuation gap it outlined when disclosing its stake. That expectation places the announcement of a new plan among the events the investor is watching in the coming period. In its announced schedule of actions, SK set 4 January 2027 as the scheduled date for cancelling treasury shares. That date falls at the start of the period in which the existing plan raises its return-on-equity and price-to-book targets.