SK Hynix’s $28.8 Billion Buyback Is Positive for Shareholders, Hana Says
Summary
- Hana Securities said SK Hynix’s $28.8 billion share buyback is clearly positive for shareholders, while maintaining its 3.6 million won ($2,594) target price and buy rating.
- SK Hynix said it plans to buy 24.07 million common shares, equivalent to 3.3% of shares outstanding, through open-market purchases worth $28.8 billion and retire all of them within one to two weeks after the acquisition is completed.
- SK Hynix said it will raise the portion of cumulative free cash flow (FCF) for 2025 to 2027 earmarked for shareholder returns to at least 50% and unveil additional return measures centered on dividends and share buybacks when it reports third-quarter earnings.
Forecast Trend Report by Period
Hana Securities said Aug. 20 that SK Hynix Inc.’s planned 40 trillion won ($28.8 billion) share buyback is clearly positive for shareholders, while maintaining its buy rating and 3.6 million won ($2,594) target price. The brokerage said additional shareholder return measures have also been flagged and could lift the total payout beyond its earlier forecast.
Hana analyst Kim Rok-ho said the firm had expected a buyback of 20 trillion won to 30 trillion won, making the announced plan larger than anticipated. With further shareholder return measures still to be outlined, the total is set to exceed Hana’s original estimate, he added.
SK Hynix said on Aug. 19 that it would buy back and cancel 40 trillion won ($28.8 billion) of its own shares. The company plans to acquire 24.07 million common shares, equivalent to 3.3% of shares outstanding, through open-market purchases from Aug. 20 through Nov. 19. It plans to retire all of the shares within one to two weeks after completing the purchase.
The company also strengthened its shareholder return policy. It had previously said 50% of cumulative free cash flow for 2025 to 2027 would be used for shareholder returns, and has now raised that to at least 50%. Free cash flow refers to cash generated from operating activities minus capital expenditures.
Kim said the larger shareholder returns planned for this year and next year, compared with the previous framework, should help improve shareholder value.
SK Hynix is also reviewing ways to expand dividends, including fixed and special dividends. Following a board resolution, it plans to disclose the size and structure of additional returns, including dividends and share buybacks, when it reports third-quarter earnings. The company intends to devote a large portion of its shareholder return resources to buybacks.
Kim also said the company’s direction on American depositary receipts, or ADRs, is clear over the medium to long term: expand the conversion ratio to enhance shareholder value.
Kim Yeon-ji, Hankyung.com reporter kongzi@hankyung.com
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