SK Hynix jumps 12% as US listing plan boosts valuation hopes

[SEOUL] SK Hynix shares surged after the memory chipmaker unveiled its plan for a US$29 billion US listing, a move that analysts viewed as boosting valuations through capacity expansion and greater foreign investor access.

The stock jumped as much as 12 per cent in early on Thursday (Jun 25) trading, helping drive the benchmark Kospi index up more than 5 per cent. Samsung Electronics also gained nearly 6 per cent after memory chip rival Micron Technology posted quarterly sales forecast that crushed Wall Street estimates.

SK Hynix is seeking 45.45 trillion won in a US listing after its Seoul-traded stock climbed more than 800 per cent in the past 12 months, lifting the company’s market value above US$1 trillion. The company expects the American Depositary Receipts (ADR) to begin trading on Jul 10 and it intends to use the proceeds for the building of additional capacity and buying extreme ultraviolet lithography machines.

At the proposed size, SK Hynix’s ADR sale would be among the top three first-time share sales ever, depending on the exchange rate. It would rival Saudi Aramco’s US$29.4 billion 2019 IPO, according to data compiled by Bloomberg.

“Going forward, the market’s focus will shift from demand to execution, particularly SK Hynix’s ability to expand HBM capacity and deliver on aggressive production targets in the US,” said Jung In Yun, chief executive officer at Fibonacci Asset Management Global. There might be some arbitrage activity between ADRs and ordinary shares, but “this should be viewed as a positive development that enhances liquidity and price discovery, rather than as a source of shareholder dilution”, he said. BLOOMBERG