Kioxia's Stock Surges, SK Hynix's Implicit Holding Value Soars to 40 Billion USD

The Seoul Economic Daily reports that with the sharp rise in Kioxia's stock price, the value of SK Hynix's related interests in Kioxia has risen to approximately $40 billion. This part of the interest is composed of two layers: one is holding more than 7% of Kioxia's equity through the Bain Capital consortium, and the other is holding convertible bonds equivalent to about 15% of Kioxia shares, which can be converted into common stock in 2028.

For SK Hynix, this non-operational asset is undergoing a significant revaluation. Previously, the market mainly focused on the cyclicality of its memory chip business, and now the strong rise in Kioxia's stock price is driving investors to include its potential holding value into the valuation framework.

Several investment banks have begun to reinclude this value in their valuation models. Goldman Sachs said on May 15th that if Kioxia issues American Depositary Receipts (ADR) in the future, it will have a positive boost on the investor sentiment for SK Hynix; JPMorgan, on the other hand, has raised its target price for Kioxia to 80,000 yen and has also increased the target prices for Samsung Electronics and SK Hynix simultaneously.

On May 15th after the market closed, Kioxia released a strong financial report. The next day (May 18th), it hit the upper limit of the Tokyo Stock Exchange as soon as the market opened, and by the time of writing, the stock price had risen to 55,670 yen. Over the past month, Kioxia’s stock price has accumulated an increase of 70.31%, and over the past year, the increase has been as high as 2,464.20%, with market value breaking through 30.4 trillion yen, ranking fourth in the Japanese stock market.

The company expects its operating profit for the second quarter to reach 1.3 trillion yen, which means that under the drive of continuous price increases in NAND, the single-quarter profit may exceed the operating profit of the entire previous fiscal year.