SK Hynix (SKHY.US) buys back the “bombing site” for 40 trillion dollars: in 2027, it may send another 130 billion US dollars of “gift packages”
The Zhitong Finance App learned that after SK Hynix (SKHY.US) implemented the latest large-scale share repurchase plan on Wednesday, J.P. Morgan stated that the company is expected to provide shareholders with an additional return of at least 130 billion US dollars (about 180 trillion won) by next year.
On Wednesday, South Korean storage giant SK Hynix said it would buy back and cancel 40 trillion won (US$28.61 billion) worth of shares and plans to use at least 50% of the accumulated free cash flow for shareholder returns by next year. The company believes that the current stock price does not fully reflect the company's value, so it has decided to fully launch a shareholder return plan.
SK Hynix said that the share repurchase will begin on August 20 and last for about three months. After the repurchase is completed, all purchased shares will be cancelled. This 40 trillion won share repurchase and cancellation plan is the largest similar transaction in the history of a Korean listed company.
Stimulated by this favorable trend, SK Hynix's stock price once surged 13% in the Korea Exchange (KRX) intraday market on Thursday.
Analyst Jay Kwon said in the report that the core focus of the 40 trillion won (about 29 billion US dollars) repurchase plan announced by the South Korean memory chip giant on Wednesday is that the company has significantly raised the return limit. SK Hynix currently promises that the cumulative free cash flow (FCF) return ratio will exceed half from 2025 to 2027, compared to the previously set limit of “50%.”
Based on this, Kwon estimates that in addition to the announced plan, additional shareholder returns of “at least 180 trillion won” will be generated by 2027. This scale is equivalent to 16% of the current total market capitalization, and the analyst believes that this move will provide strong bottom support for stock prices after the recent sell-off.
Kwon wrote in the report: “We believe the worst is over. It is expected that mid-term stock price sentiment will gradually recover. Investors are advised to adjust to the dips and absorb in batches.” He added that the buyback program was launched significantly earlier than the market's general expectations.
SK Hynix's strong rebound also boosted Korea's benchmark KOSPI Index, and the stock price of its biggest competitor Samsung Electronics Co. (Samsung Electronics Co.) surged 10% at the same time. Also, according to foreign media, citing unnamed industry insiders, Samsung plans to finalize and announce a shareholder return plan of over 100 trillion won after this month's board meeting.
Market expectations for additional dividends and returns are expected to revive the upward momentum of the Korean storage sector. Previously, due to market concerns about the sustainability of AI capital expenditure for large North American technology customers and the threat of increasingly fierce competition from Chinese manufacturers, related individual stocks have continued to be under pressure recently. Up to now, SK Hynix's stock price has retreated more than 40% from its all-time high in June.