S&P Expects SK Hynix to Resume Up to 40 Trillion Won Buyback in Q4

On Sept. 8, S&P Global Market Intelligence's latest forecast showed that, driven by strong AI memory chip demand, SK Hynix is expected to announce a new share buyback program in the fourth quarter of this year, with a size estimated between 20 trillion and 40 trillion won (about $280 billion).

Even after completing a large-scale buyback, the company will still be able to pay generous dividends, adding a strong catalyst to the Korean government's "Value-up" and shareholder return restructuring drive.

Mohammad Hassan, head of Asia-Pacific equity dividend forecasts at S&P Global Market Intelligence, said in an interview that the lower end of SK Hynix's new buyback is expected to be 20 trillion won, "and it could again reach the upper limit of 40 trillion won."

Buoyed by this expectation, SK Hynix ADRs surged more than 6% on Tuesday to close at $187.99. On Wednesday, after the Korean stock market opened, SK Hynix's Korea-listed shares rose as much as 5%.

He also expects more Korean listed companies to follow suit with buyback announcements in the fourth quarter. Hassan added:

More and more companies will emulate this practice, as it sets a new benchmark for listed companies to properly reward investors.

Buybacks Becoming Routine, Cash Flow Supports "High Buyback + High Dividends"

S&P believes SK Hynix's shareholder return measures are shifting from a traditional "one-time boost" to an "institutionalized and routine" approach.

Previously, SK Hynix completed a 40 trillion won buyback and cancellation program and pledged to use more than 50% of free cash flow (FCF) for shareholder returns.

More importantly, thanks to its excellent cash flow position, even if it continues to carry out large-scale buybacks worth several trillion won, SK Hynix still has the ability to pay "quite substantial and generous dividends."

To fundamentally reverse the long-standing "Korea discount" in the Korean capital market, the Korean government has strongly advocated the "Corporate Value-up Program," encouraging companies to strengthen market capitalization management through measures such as canceling treasury stock and increasing dividends.

Previously, Samsung Electronics took the lead in responding to regulatory guidance by canceling more than 87 million treasury shares and launching a massive dividend plan.

Hassan commented that Samsung Electronics' record dividends combined with SK Hynix's routine buybacks will set a new benchmark for market capitalization management and corporate governance in the Korean capital market, constituting a major positive for the entire Korean stock market.