Analysis: SK Hynix Shareholder Return Plan Exceeds Expectations, Potential Return Size by 2027 Could Reach 150 Trillion Korean Won

BlockBeats News, August 19th - Meritz Securities analyst Kim Sun-woo stated that on August 19th, SK Hynix announced a shareholder return plan after hours, declaring its intention to repurchase and cancel ₩40 trillion of treasury shares within 3 months. The timing of this announcement was earlier than the "to be announced within the third quarter" plan previously suggested by the company, and Kim Sun-woo believes the market may perceive the timing itself as exceeding expectations.

SK Hynix stated that the decision for a large-scale repurchase and cancellation was made because the company believes the current stock price does not fully reflect its business competitiveness and cash generation ability. In addition, the company plans to announce a new regular dividend and special dividend policy at the end of October during the third-quarter earnings conference.

Meanwhile, SK Hynix has increased the shareholder return scale from the previous "within 50% of Free Cash Flow (FCF)" to "more than 50% of FCF" and plans to introduce a capital reduction dividend policy next year. Meritz Securities predicts that SK Hynix's FCF in 2027 could reach ₩25 to ₩30 trillion. Based on this calculation, the potential shareholder return scale could reach ₩125 to ₩150 trillion (approximately $89.9 billion to $107.9 billion).

This plan has exceeded expectations in three aspects: the timing of the announcement, management's perception of undervaluation, and the outlook for future policies. It is expected that the company will concentrate on completing the share repurchase in the next 3 months to boost stock performance.