JPMorgan Urges Buying More SK Hynix on Prospect of $130 Billion in Shareholder Returns
Summary
- JPMorgan Chase said it recommends accumulating shares of SK Hynix, citing the possibility that the company will increase shareholder returns.
- The bank said analyst Jae Kwon expects SK Hynix to deliver additional shareholder returns of at least $130 billion by next year and at least $130 billion by 2027.
- Kwon said that would equal 16% of the company’s market capitalization, help support the recently battered share price, and improve investor sentiment over the medium term, adding that he recommends accumulating shares.
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A Wall Street report is making the case to buy SK Hynix shares. JPMorgan Chase recommended accumulating the stock, citing the possibility that the chipmaker will further expand shareholder returns.
Bloomberg reported on Aug. 20 that JPMorgan analyst Jae Kwon wrote in a note that SK Hynix could deliver at least $130 billion in additional shareholder returns by next year.
Kwon said the key point in the company's $29 billion share buyback announced a day earlier was its decision to raise the ceiling on shareholder returns, paving the way for a larger payout.
SK Hynix had previously said it would use more than 50% of cumulative free cash flow for shareholder returns.
Based on that policy, Kwon estimated the company could provide at least $130 billion in additional shareholder returns by 2027. That would equal 16% of its current market capitalization and should help support the stock after its recent plunge.
"The worst appears to be over," Kwon wrote. "With investor sentiment toward the stock set to improve gradually over the medium term, we recommend accumulating shares."
Lee Seul-gi, Hankyung.com reporter seulkee@hankyung.com
Korea Economic Daily
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