[TORONTO] SK Hynix is exploring the possibility of listing its shares in New York, a move seen as potentially helping close the valuation gap between the South Korean chipmaker and its U.S. peers, including Micron Technology.
SK Hynix said in a regulatory filing on Wednesday (December 10) that the company is “considering various measures to increase its corporate value, including the possibility of listing on the U.S. stock market using treasury stock, but nothing has been finalized at this time.” The company's shares rose as much as 4.8% in early Seoul trading on Wednesday.
The company's stock has risen about 240% so far this year, helped by hot demand for high-bandwidth memory chips that are driving the artificial intelligence boom. It is also benefiting from South Korea's ongoing campaign to increase corporate value and improve governance.
“Listing its own shares as ADRs (American Depositary Receipts) could narrow the valuation gap between SK Hynix and other listed peers (such as Micron and TSMC),” Douglas Kim wrote in a note on SmartKarma. “ADR listings could attract capital from passive funds, ETFs, and long-only funds that invest only in U.S.-listed stocks.”
SK Hynix's statement was later issued. Korea Economic Newspaper According to reports on Tuesday, the company had received proposals from several investment banks to list about 2.4% of its outstanding shares, or about 17.4 million shares, as American Depositary Receipts.
The purpose of promoting the country's governance reform is to eliminate the “Korean discount'' that has long been applied to domestic stocks as foreign investors shy away from the market. One of the proposals calls for the cancellation of treasury stock, or shares held by companies, that conglomerates have used to maintain control.
SK Hynix stock rose 6.1% on Monday, its biggest rise since mid-November, amid renewed speculation that the company is preparing to list in the United States. The sudden move, on top of the significant rise in stock prices since the beginning of this year, prompted the Korea Exchange to warn investors to tread carefully. bloomberg
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