SK Mania

Update on SK Square

As expected, we saw some continued hype going into the second week of post-IBKR access in the Korean market. Western retail was certainly chomping at the bit during the extended weekend and on the 4th of May we certainly opened up with a bang and SK Square printing +18% on the day and the NAV discount printing an intraday tight at ~38% (closing the day at 39.3%).

Overall since the 26th of April, SK Square is up +51% and we saw 830 bps of NAV discount compression peak-to-trough.

We are now ~2x up on our SK Square buys and were lucky enough to catch the local lows on the NAV discount when we started trimming:

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We sold some further shares later in the week with a view to potentially compound on pullbacks as well as rotate capital elsewhere. We’ve taken in excess of our cost basis out now and happy to let the rest ride for a while, noting that SK Square is less of a “slam dunk” vs. when we originally underwrote the name earlier this year.

We now require more “aggressive” assumptions in terms of SK Hynix growth/multiple re-rate alongside continued NAV discount compression

SK Inc.

We also took a brief look at SK Inc. earlier this week

While the discount is even steeper (60% post cancellation of treasury shares), we are cautious about taking exposure when the memory (SK Square) share of GAV is only 53%. Having said that, we were curious to take a deeper look notably at their stake in SK Telecom, an early investor in Anthropic.

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Origo Research

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