Ask Warren

SK Networks

001740 · KOSPI · ₩001740 · SK네트웍스

₩5,820▼ ₩30 (0.51%)End-of-day · Oct 29, 2026 · End-of-day prices.
Trade
Alert me
SellBuy

Valuation model · Discounted cash flow (DCF)

We use a 5-year discounted cash flow: the value of the cash the business is expected to produce, in today's money.

Fair value per share

₩1,120

vs the current price (₩5,820)

Enterprise value
₩1.2T
Equity value
₩225B
WACC
5.7%

Model estimate based on the assumptions shown. Not a price target and not a buy or sell signal. This is not financial advice.

Why the model and the price differ

The model is 81% away from today's price. A gap this size usually means the market expects something the past figures don't show yet, or the model leaves something out. What we can see:

  • To match today's price of ₩5,820, the model needs an operating margin of 2.3% every year (it uses 1.4%).
  • Or revenue growth +13.9 points a year higher than assumed in each of the 5 years.
  • 49% of the last 12 months' net profit came from outside operations (stakes in other companies, interest, one-offs). The model adds those stakes at book value but doesn't project that income.
  • Today's P/E is 9.8× against a typical 19.8× over the last 10 years.

Treat the model as a starting point: change the assumptions to the story you believe, and compare with the multiples check below.

Bear / Base / Bull

Bear
—
Base
₩1,120
−80.8%
Bull
₩20,895
+259.0%

Bear: revenue growth 3 points lower every year, EBIT margin 2 points lower, WACC 1 point higher. Bull: the opposite.

Assumptions

Sign in to change the assumptions and see the results update. Sign in

Cycle options

Margin path

Every year uses the cycle-average margin (1.4%).

Revenue growth

  • -10%

    How much sales grow that year, compared with the year before.

    Default: the last 3 years' revenue growth (-11.3% a year, annual reports), fading to 3% by year 5.

  • -6.7%

    How much sales grow that year, compared with the year before.

    Default: the last 3 years' revenue growth (-11.3% a year, annual reports), fading to 3% by year 5.

  • -3.5%

    How much sales grow that year, compared with the year before.

    Default: the last 3 years' revenue growth (-11.3% a year, annual reports), fading to 3% by year 5.

  • -0.2%

    How much sales grow that year, compared with the year before.

    Default: the last 3 years' revenue growth (-11.3% a year, annual reports), fading to 3% by year 5.

  • 3%

    How much sales grow that year, compared with the year before.

    Default: the last 3 years' revenue growth (-11.3% a year, annual reports), fading to 3% by year 5.

Business

  • 1.4%

    Operating profit as a share of revenue.

    Default: through-the-cycle average of the last 12 months and the last 5 annual reports' operating margins.

  • 27.5%

    Share of operating profit paid as corporate tax.

    Default: Korea's top corporate tax rate (25%) plus 10% local income tax.

  • 1.2%

    The non-cash cost of wearing out equipment, added back to cash flow (% of revenue).

    Default: not in the statements, so 80% of capital spending (most spending replaces equipment that wears out).

  • 1.5%

    Money spent on factories, equipment, software and other long-term assets (% of revenue).

    Default: average of the last 3 annual reports (cash flow statements; equipment and intangibles).

  • 2.5%

    Stock and unpaid customer bills, less unpaid supplier bills, as a % of revenue. Each year's extra revenue ties up this much more cash.

    Default: working capital (current assets less cash and deposits, minus current liabilities other than borrowings) as a share of revenue, averaged over the last 3 years.

Discount rate

  • 2%

    How fast cash flows keep growing every year after year 5.

    Default: about Korea's long-run inflation plus real growth.

  • 4.01%

    Yield on Korea's 10-year government bond: the return with almost no risk.

    Default: Korea Treasury Bond 10-year yield on 2026-10-30.

  • 0.69

    How much the share moves when the market moves: 1 means just like the market.

    Default: 105 weeks of weekly returns against KOSPI (official index); raw beta 0.54, adjusted toward 1 and kept between 0.6 and 2.0.

  • 5.5%

    The extra return investors want for owning shares instead of bonds.

    Default: a typical premium for Korean shares.

  • 5.51%

    The interest rate the company would pay to borrow.

    Default: the 10-year yield plus a 1.5% credit spread.

Starting point

Revenue (TTM to H1 2026)
₩6.8T
Net debt (borrowings and leases − cash and deposits)
₩1.5T
+ Stakes and investments
₩575B
Associates, long-term financial assets and deposits (book value)
− Minority interests
₩84B
Shares
200,593,889
Share price
₩5,820
Market cap
₩1.2T

TTM = trailing 12 months: the last four reported quarters added together. "TTM to H1 2026" is the 12 months up to the latest quarterly or half-year report (H1 = to the end of June). Year 1 grows from there.

Past years and projection

Grey columns are reported results from the annual reports (after-tax EBIT at the model's tax rate), so you can check the growth and margin assumptions against the past. Years 1–5 are the model.

FY2023FY2024FY2025Year 1Year 2Year 3Year 4Year 5
Revenue₩9.1T₩7.7T₩6.7T₩6.1T₩5.7T₩5.5T₩5.5T₩5.6T
Growth−5.5%−16.2%−11.9%−10.0%−6.7%−3.5%−0.2%3.0%
EBIT₩237B₩114B₩86B₩85B₩80B₩77B₩77B₩79B
EBIT margin2.6%1.5%1.3%1.4%1.4%1.4%1.4%1.4%
After-tax EBIT₩172B₩83B₩63B₩62B₩58B₩56B₩56B₩57B
+ Depreciation———₩73B₩68B₩66B₩66B₩68B
− Capital spending₩132B₩133B₩80B₩92B₩85B₩82B₩82B₩85B
− Working capital−₩321B₩363B−₩156B−₩17B−₩10B−₩5B−₩275M₩4.1B
Free cash flow———₩61B₩51B₩44B₩39B₩36B
Discount factor———0.9460.8950.8470.8020.759
Present value———₩57B₩46B₩38B₩32B₩28B

Terminal value ₩1.3T, worth ₩1T today: 83% of enterprise value. It assumes spending settles at 110% of depreciation once growth slows to the terminal rate.

Cross-check: what the market has paid before

For cyclical businesses, analysts check a DCF against the multiples the stock has traded at through past cycles. Price / book is the usual anchor for them: P/E looks highest at the bottom of a cycle, when earnings are smallest, and lowest at the top. The price each band would give today:

LowTypicalHigh
Price / book (book value ₩10,515 a share)Now 0.55×₩4,0100.38×₩4,7630.45×₩6,4420.61×
Price / earnings (last 12 months: ₩596 a share)Now 9.77×₩6,22710.5×₩11,79919.8×₩15,56226.1×
P/E on run-rate earnings (Q2 2026 × 4: ₩962 a share)Now 6.05×₩10,06210.5×₩19,06619.8×₩25,14726.1×

Low, typical and high are the 10th percentile, middle and 90th percentile of month-end multiples since 2021, each against the latest report out by then, per share at today's share count; loss years and P/E above 100 are left out. Run-rate earnings are one quarter × 4, not a forecast. Model estimate based on the assumptions shown. Not a price target and not a buy or sell signal.

Sensitivity

Fair value per share as two inputs change; the middle is the current case.

WACC ↓ · Terminal growth →1.0%1.5%2.0%2.5%3.0%
4.7%₩1,491₩2,273₩3,345₩4,908₩7,398
5.2%₩728₩1,303₩2,057₩3,093₩4,601
5.7%₩128₩565₩1,120₩1,848₩2,848
6.2%——₩407₩942₩1,645
6.7%———₩253₩770

Now (TTM)

Market cap
₩1.2T
Enterprise value
₩2.5T
P/E
9.8×
P/B
0.6×
P/S
0.2×
EV/EBITDA
—
Dividend yield
4.3%

Over time (at each year end)

20252024202320222021
Price₩4,520₩4,150₩5,750₩3,870₩5,020
Market cap₩907B₩832B₩1.2T₩776B₩1T
P/E18.2×17.4×—9.0×10.2×
P/B0.4×0.4×0.5×0.3×0.5×
P/S0.1×0.1×0.1×0.1×0.1×
EV/EBITDA—————
Dividend yield5.5%7.2%———

Versus similar companies

CompanyP/EP/BP/SEV/EBITDADividend yield
SK Networks9.8×0.6×0.2×—4.3%
Samsung C&T18.8×0.5×1.2×—0.9%
POSCO International10.5×1.2×0.3×—3.8%
ISC45.4×6.1×12.7×—0.5%
Youngone5.1×0.7×0.7×—3.1%
Dong SUH Companies19.2×1.6×5.1×—4.1%
Shinsegae13.9×0.4×0.3×—2.1%
Similar companies (median)16.3×1.0×1.0×—2.6%

Calculated from end-of-day prices and filed financial statements. Not a recommendation. This is not financial advice.

Also known as: SK Networks / SK네트웍스 / 001740 / KRX:001740

Source: KRX statistical information