Align Partners discloses 1.5% stake in SK, flags 75% valuation discount - report

South Korean activist investor Align Partners Asset Management has disclosed a 1.5% stake in SK Inc, arguing that the conglomerate is significantly undervalued and could see its shares rerated under a new corporate value-enhancement plan expected later this year, ChosunBiz reported on Wednesday.

Align founder and Chief Executive Lee Chang-hwan outlined the investment case at the 13D Monitor Active-Passive Investor Summit in New York on Tuesday, saying SK had strong earnings and a leading artificial intelligence business foundation but traded well below its intrinsic value, according to the report.

Align estimates SK’s intrinsic net asset value at about 100 trillion won, implying a discount of around 75%. The fund also highlighted that SK’s market capitalisation of 24.9 trillion won as of October 16 was less than half the approximately 60 trillion won value of its indirect stake in SK hynix held through SK Square, ChosunBiz reported.

The activist investor described this structure as a “double discount”, arguing that the value of SK hynix is discounted at both the intermediate holding company and parent-company levels. SK shares were quoted at 478,000 won, up 11.68%, in the price data accompanying the report.

Based on brokerage consensus estimates, Align expects SK to generate net income of about 24.4 trillion won in 2027, nearly matching its market capitalisation. The fund said SK had the lowest valuation among KOSPI 200 constituents with available analyst consensus estimates, according to ChosunBiz.

Align views a new corporate value-enhancement plan, which SK is expected to announce before the end of the year, as a potential catalyst for narrowing the valuation gap. The report did not detail specific measures the fund is seeking from SK.