Will SK Hynix’s $28.9 Billion Buyback Keep Working? Monday Trading in Focus

Shares Climb 2.31% Friday, Capping a 5.17% Weekly Rebound

Brokerages See Better Near-Term Flows but Flag Profit-Taking Risk

SK Hynix shares rebounded after the company announced a 40.0043 trillion won ($28.9 billion) share buyback and retirement plan, putting Monday’s trading in focus. Brokerages say the large shareholder-return program could support near-term trading flows, while also cautioning that profit-taking may emerge because part of the filing’s impact has already been reflected in the stock.

According to Hankyung Epic AI data on August 23, SK Hynix closed at 1.73 million won on August 21, up 2.31% from the previous session. The stock swung sharply during the day, dropping to 1.669 million won before rebounding to 1.773 million won. For the third week of August, it rose 5.17%.

The rebound followed the buyback announcement. In a filing after the close on August 19, SK Hynix said it would buy 24.07 million common shares on the open market for 40.0043 trillion won ($28.9 billion) and retire all of them. The purchase period runs from August 20 through November 19. The shares are equal to about 3.3% of those outstanding.

Analysts said both the size and timing were stronger than expected. Kim Rok-ho and Park Gyu-yeon of Hana Securities wrote that the buyback topped the 20 trillion won to 30 trillion won range that had been circulating in the market. Lee Jong-wook and Kim Kyung-bin of Samsung Securities highlighted that it would be the largest treasury-share retirement by a South Korean listed company.

The impact on trading flows is also in focus. Ryu Young-ho of NH Investment & Securities estimated that purchases could average about 645 billion won ($466 million) a day based on the number of trading days in the acquisition period. Kim Woon-ho and Ko Hyuk-jin of IBK Investment & Securities said the daily purchase limit is equal to 42% of the stock’s average daily trading volume over the past month, making it a possible starting point for a rebound.

The plan also improves per-share value. Park Jun-young and Kim Na-woo of Hanwha Investment & Securities estimated that, based on the August 19 closing price of 1.5 million won, retiring all of the repurchased shares would raise earnings per share by about 3.8%.

Earnings expectations are also underpinning the stock. Son In-jun of Eugene Investment & Securities said delays in HBM4 shipments and the gap in commodity DRAM prices, which hurt second-quarter results, should largely normalize in the third quarter. Kim Dong-won, Lee Chang-min and Kang Da-hyun of KB Securities also took a positive view of new HBM4 mass production and a deepening memory supply shortage.

Still, further gains on Monday are far from certain. The shares have already rebounded in part since the buyback announcement, and the recent jump could trigger short-term profit-taking. A stronger won, which could pressure earnings estimate revisions, and the performance of global semiconductor stocks are also variables. BNK Investment & Securities remains relatively cautious, saying the stock could rebound from a short-term oversold level but that gains may be limited if concerns about weakening demand persist.

Lee Song-ryul, Hankyung.com reporter yisr0203@hankyung.com