SK Hynix Shareholder Return Program Exceeds Expectations, Potential Return Scale Could Reach 150 Trillion KRW by 2027

Odaily News - Kim Sun-woo, an analyst at Korea's Meritz Securities, stated that SK Hynix announced its shareholder return program after the market close on August 19, declaring it would repurchase and cancel 40 trillion KRW worth of its own shares within three months. The announcement came earlier than the company's previously stated plan to "disclose within Q3," and Kim Sun-woo believes the market may view the timing itself as exceeding expectations. SK Hynix said the decision to conduct such a large-scale buyback and cancellation was made because the company believes its current share price does not fully reflect its business competitiveness and cash generation capabilities. Additionally, the company plans to announce new basic dividend and special dividend policies at its Q3 earnings call in late October. Meanwhile, SK Hynix has raised its shareholder return scale from the previous "within 50% of free cash flow (FCF)" to "above 50% of FCF," and plans to introduce a capital reduction dividend policy next year. Meritz Securities estimates that SK Hynix's FCF could reach 250 trillion to 300 trillion KRW by 2027, which would put potential shareholder returns at 125 trillion to 150 trillion KRW (approximately $89.9 billion to $107.9 billion). The plan exceeded expectations in three aspects: the timing of the announcement, management's recognition of the undervaluation, and expectations for subsequent policies. The firm also expects the company to complete share buybacks within the next three months to boost share price performance.