[Edaily Reporter Park Jung-Soo ] On the 20th, SamsungSecurities assessed that SK hynix(000660)’s shareholder return policy—which includes a 40 trillion won share buyback and cancellation—signals management’s confidence in the sustainability of earnings. The firm maintained its “Buy” rating and target price of 3 million won. The previous day’s closing price was 1.5 million won.
Lee Jong-wook, an analyst at SamsungSecurities, stated, “The narrative surrounding the stock is shifting toward earnings sustainability,” adding, “Shareholder returns serve as a signal from management regarding earnings sustainability and act as a catalyst that highlights the stock’s upside potential.”
SK hynix held a board meeting on the 19th and decided to repurchase and cancel 40 trillion won worth of its own shares. Based on the closing price of 1,662,000 won on the 18th, this amounts to 24.07 million shares, representing 3.3% of the total issued shares. The repurchase period will last approximately three months, from today through November 19, and the company plans to cancel all shares immediately upon completion of the repurchase.
SamsungSecurities assessed that the scale of this share buyback and cancellation is significant even when compared to other global memory manufacturers. Kioxia announced a share buyback worth approximately 800 billion yen on the 31st of last month and purchased 2.9% of its outstanding shares over a six-day period, while SanDisk bought back approximately $4.5 billion worth of its own shares in the June quarter. SK hynix explained that its 40 trillion won, 3.3% share buyback and cancellation program actually exceeds the scale and percentage of its U.S. and Japanese competitors when measured by actual execution.
The scale of shareholder returns is also expanding. SK hynix has raised its shareholder return target for the period 2025–2027, based on cumulative free cash flow (FCF), from the previous “within the 50% range” to “50% or more.” The company plans to combine share buybacks and cancellations with cash dividends, and will disclose the specific scale and method of additional returns when it announces its third-quarter earnings.
SamsungSecurities estimated SK hynix’s cumulative FCF for 2025–2027 at approximately 220 trillion won. Even excluding the 54.9 trillion won already returned to shareholders, the firm projected that more than 15% of the company’s current market capitalization would be used for additional shareholder returns by 2027.
The analyst interpreted this shareholder return policy as a sign of management’s confidence in the sustainability of profits. “The key debate in the stock market right now is how long the unprecedented profits generated by the AI cycle for memory companies will last,” he said, adding, “The scale and duration of shareholder returns are management’s answer to how much they trust in the sustainability of those profits.”
He went on to explain, “The fact that not only SK hynix but also memory companies such as Kioxia and SanDisk have simultaneously taken the same actions is clear evidence that the industry views the trajectory and profit levels of this cycle differently than in the past.”
The analyst noted, “While the narrative driving stock prices in the first half of this year centered on steep DRAM price increases and earnings surprises, the focus has shifted to profit sustainability following the market correction,” adding, “Shareholder returns will serve as a catalyst to prevent stock prices from falling further and highlight their upside potential.”