SK Hynix Pursues U.S. Listing via ADR, Stock Reclaims 1 Million Won Mark

SK hynix (000660.KS), the world's second-largest memory chipmaker, said it has begun procedures for listing on a U.S. stock exchange. The move has raised expectations of a corporate value reassessment, drawing attention to the stock's recovery above the symbolic 1 million won level, dubbed "1 Million-nix" among Korean investors.

According to the electronic disclosure system on June 25, SK hynix announced it had confidentially submitted a registration statement to the U.S. Securities and Exchange Commission (SEC) for listing American Depositary Receipts (ADRs).

The company said it aims to complete the listing within this year, but details including the offering size, method and timeline have not yet been finalized. The final decision on whether to proceed will be made after comprehensively considering the SEC's review results, market conditions and investor demand forecasts. "We plan to make a follow-up disclosure when specific details are confirmed or within six months," SK hynix said.

ADRs are depositary receipts issued by U.S. financial institutions. When a Korean company deposits its treasury shares with an entity such as the Korea Securities Depository (KSD), a U.S. depositary institution issues substitute securities based on those shares, enabling trading on U.S. markets such as the New York Stock Exchange (NYSE). In effect, a portion of SK hynix shares would be traded directly in dollars on a U.S. market rather than solely on the KOSPI.

In Korea, companies including POSCO Holdings, Korea Electric Power Corp., LG Display and KB Financial Group already have ADRs trading in the U.S. During this year's market rally, some ADR prices outpaced the gains of their underlying domestic shares. Treasury-share-based ADRs are attracting attention as a method to utilize treasury shares without diluting existing shareholders' stakes.

The core expectation behind the ADR issuance is that it could narrow the structural valuation gap with Micron Technology that has persisted over time. Despite having a similar product portfolio and corporate scale to Micron, SK hynix has been relatively undervalued. This is because the company's listing solely on the Korean market has limited the inflow of capital from U.S. long-only and passive funds.

A U.S. ADR listing would allow foreign investors to invest directly in dollars, broadening the investor base and potentially increasing the likelihood of inclusion in the Philadelphia Semiconductor Index (SOX), the global benchmark semiconductor index. TSMC of Taiwan and ASML of the Netherlands have already expanded their overseas investor bases and boosted corporate valuations through ADR issuances. TSMC's case is frequently cited as an example where ADR strength lifted the company's domestic share price in Taiwan as well.

Mirae Asset Securities (006800.KS) maintained its target price for SK hynix at 1.54 million won in a recent report. Regarding the ADR issuance, the brokerage said, "Beyond the re-rating effect from entering a high-valuation market, if the ADR issuance is accompanied by a meaningful scale of treasury share purchases — around 5% — the positive supply-demand effect on the stock price would be significant."

As of 9:07 a.m., SK hynix shares were trading at 1.018 million won, up 3.25% from the previous session. If the stock closes above 1 million won, it would mark the first time since June 20, a span of three trading days.