[비즈한국] One of the hottest issues this past weekend was the news that T1, the 'defending champion' of League of Legends (LoL) esports, rose to the top of the world for the second consecutive year. T1, featuring star player 'Faker' Lee Sang-hyeok, defeated China’s Bilibili Gaming with a set score of 3-2 in the 2024 LoL World Championship final, held at the O2 Arena in London on the 2nd (local time).
This tournament, where the strongest teams that have conquered their respective national leagues gather to compete, is often called the 'LoL World Championship' (or Worlds), earning a reputation as the World Cup of esports. In particular, LoL enjoys massive popularity both domestically and internationally, with the final alone estimated to have 500 million annual viewers. Last year, the number of viewers for the World Championship final held at Gocheok Sky Dome in Seoul reached 100 million, with a cumulative online viewership of 400 million. The total prize pool for this year's tournament also stands at $2.225 million (approximately 3 billion KRW).
Those uninterested in games might wonder why this game is so globally popular. LoL is a game where teams of five battle against each other, and it shares similar aspects with other competitive sports, attracting global attention. Faker once remarked, “If viewers draw inspiration from the practice and competition required to determine a winner, it can be considered a sport.” Esports was officially adopted as a medal event at the 2022 Hangzhou Asian Games.
T1 is an esports organization founded by SK Telecom017670 in 2004, marking its 20th anniversary this year. Since the corporate spin-off in 2021, SK Square402340, the holding company of SK Hynix000660, has been the largest shareholder with a 55.3% stake, operating the team in partnership with U.S.-based Comcast. An SK Telecom official stated, "For the value-up of T1, SK Square conducted a 13.5 billion KRW capital increase together with Comcast in 2022 and also successfully renewed the contract with player Faker."
They further commented, "We have laid the groundwork to develop various businesses based on the brand value of Faker, who has an legendary status in the global esports industry, while simultaneously increasing the chances of T1 winning the World Championship." T1 achieved 34.6 billion KRW in revenue last year, a 45% growth compared to 2022. Reflecting the high expectations for T1, SK Square's stock price surged by more than 7% in the domestic stock market on the 4th.
In fact, the surge in SK Square's stock price that day was also linked to SK Hynix. Recently, SK Hynix recorded its highest-ever quarterly revenue for the third quarter of this year. SK Hynix's third-quarter revenue reached 17.5731 trillion KRW, an increase of 93.8% compared to the same period last year, and it turned a profit with an operating income of 7.03 trillion KRW.
Additionally, Democratic Party leader Lee Jae-myung’s expression of agreement to abolish the financial investment income tax acted as a tailwind for the stock. Furthermore, Chairman Chey Tae-won’s anecdote shared at the SK AI Summit held that day—mentioning that "NVIDIA CEO Jensen Huang requested that HBM4 supply be moved up by six months"—also had a positive impact on the stock price.
Beyond the value-up of T1, SK Square is also raising expectations with its upcoming disclosure of a corporate value enhancement plan. SK Square is scheduled to announce its value enhancement details within this month. The securities industry expects the company to present additional shareholder return measures utilizing dividend income and the proceeds from the sale of its stake in Krafton259960.
While it is difficult to expect a dramatic rebound in stock price based solely on the disclosure of a value-up plan, it appears it will help in emerging from an undervalued state. Shin Eun-jeong, a researcher at DB Financial Investment, explained, "Basically, SK Square's stock price is heavily linked to SK Hynix's stock price, but recent levels show a 64% discount, and considering the continuous shareholder return policy, a discount rate in the 50% range is quite reasonable."
Kim Soo-hyun, a researcher at DS Investment & Securities, noted, "Qualitative aspects of earnings are also improving, with revenue growth rates for SK Planet and TMAP expected to reach 10% and 14.4% respectively next year," adding, "Due to increased equity method gains from SK Hynix's improved performance, operating profit is expected to reach 2.86 trillion KRW this year and 4.4 trillion KRW next year." Researcher Kim added, "As the only domestic investment-type holding company employing an asset turnover strategy, this is an exemplary case of utilizing a portion of recovered funds for shareholder returns."