Hana Securities on the 20th said it judged that SK hynix(000660)'s decision to acquire and cancel 40 trillion won worth of treasury shares would exceed the originally expected scale of shareholder returns. It maintained its "Buy" rating and a target price of 3.6 million won. The previous day, SK hynix closed at 1.5 million won.
SK hynix disclosed the acquisition and cancellation of treasury shares. The expected acquisition period is from that day through Nov. 19, and the planned amount is 40 trillion won. This is equivalent to 3.6% of market capitalization based on the previous day's closing price.
Kim Rok-ho, an analyst at Hana Securities, said, "The full acquisition of treasury shares could be completed earlier than the scheduled date, and after the acquisition is completed, the company plans to adopt a swift shareholder return method by canceling the entire amount within one to two weeks," adding, "Because the purpose is to cancel the entire amount, it is unrelated to securing shares for employee bonuses."
SK hynix is also reviewing plans to increase dividends, including existing fixed dividends and special dividends. After a future board resolution, the company plans to share the specific additional size and method of returns, including dividends and share repurchases, through the third-quarter earnings announcement. SK hynix plans to allocate a large portion of shareholder return resources to acquiring treasury shares.
SK hynix had a policy of using 50% of cumulative free cash flow (FCF) over the three years from 2025 to 2027 as resources for shareholder returns. However, with this announcement, the policy has been raised to return more than 50% of FCF to shareholders, according to the analysis.
Kim said, "Not only this year but also in 2027, the scale of shareholder returns will be strengthened compared with before, so we believe these announcements will help improve shareholder value," adding, "There was a remark that more than 100 trillion won in cash needs to be secured for future investments and financial soundness, and as investment size has recently increased, additional cash is expected to be needed."
Hana Securities estimated that the company would secure in cash equivalents an amount roughly equal to two years of capital expenditures (capex).
Hana Securities had initially estimated shareholder returns of 40 trillion won to 60 trillion won within this year and expected the proportions of share repurchases and dividends to be about half and half.
Kim said, "In other words, we projected a 20 trillion won to 30 trillion won share repurchase, but an amount exceeding that has been announced," adding, "Because additional return policies will also be shared, we judge the scale will exceed what we initially expected."
Meanwhile, SK hynix plans to pursue a long-term increase in the proportion of American depositary receipt (ADR) exchange. However, because this is not something it can decide on its own, the company plans to make decisions through continued consultations with relevant institutions.
Kim explained, "Because the current proportion is quite low, the direction is clear to expand the exchange proportion over the mid to long term to contribute to shareholder value."