Analysis: SK Hynix's Shareholder Return Plan Exceeds Expectations, Potential Returns Could Reach 150 Trillion Won by 2027

08/19 11:45

On August 19, South Korean Meritz Securities analyst Kim Sun-woo stated that SK Hynix announced its shareholder return plan after market hours on August 19, revealing a plan to repurchase and cancel 40 trillion won of its own shares within three months. This announcement came earlier than the company's previously stated plan to disclose it 'within the third quarter,' leading Kim Sun-woo to believe that the market may perceive the timing itself as exceeding expectations. SK Hynix indicated that the decision for a large-scale repurchase and cancellation was made because the company believes its current stock price does not adequately reflect its business competitiveness and cash generation ability. Additionally, the company plans to announce a new basic dividend and special dividend policy at the end of October during its third-quarter earnings presentation. Furthermore, SK Hynix has raised its shareholder return scale from the previous 'up to 50% of free cash flow (FCF)' to 'over 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 won by 2027, which would imply potential shareholder returns of 125 trillion to 150 trillion won (approximately 89.9 billion to 107.9 billion USD). This plan exceeds expectations in terms of timing, management's recognition of undervaluation, and subsequent policy expectations, and it is anticipated that the company will focus on completing the share repurchase within the next three months to boost stock performance.
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