Disclaimer: This article is for informational purposes only and does not constitute financial advice.
Investment Thesis and Target Price
Hanwha Investment & Securities maintains a Buy rating for SK Hynix with a Target Price of 3,150,000 KRW (~$2,263 USD based on 1392 KRW/USD). The valuation is driven by a massive shareholder return policy, highlighted by the company’s decision to acquire and cancel treasury shares worth 40 trillion KRW (~$28.7B USD). The brokerage emphasizes that this is not a one-time event but the start of a larger cycle, as the company has shifted its shareholder return policy from ‘50% of cumulative Free Cash Flow (FCF)’ to ‘50% or more’ for the 2025-2027 period.
Earnings Estimates and Financial Preview
The brokerage estimates SK Hynix’s Free Cash Flow (FCF) to be 28.8 trillion KRW (~$20.7B USD) in 2025, 191.6 trillion KRW (~$137.6B USD) in 2026, and 270.6 trillion KRW (~$194.4B USD) in 2027. This results in a three-year cumulative FCF of approximately 491 trillion KRW (~$352.7B USD). Based on the minimum return rate of 50%, the total shareholder return is estimated to exceed 245 trillion KRW (~$176.0B USD). The current 40 trillion KRW (~$28.7B USD) buyback is viewed as an early execution of these total expected returns, reflecting management’s confidence in future cash generation and financial health.
Key Semiconductor Drivers and Outlook
The primary catalyst is the significant increase in per-share value through the reduction of outstanding shares. Based on the closing price of 1.5 million KRW on August 19, the 40 trillion KRW (~$28.7B USD) buyback could cover approximately 3.6% of issued shares, potentially increasing Earnings Per Share (EPS) by about 3.8% upon cancellation. The brokerage expects the company to prioritize treasury share buybacks and cancellations over dividends, with the potential for cumulative buybacks to exceed 120 trillion KRW (~$86.2B USD) if half of the estimated return resources are utilized for this purpose.
🔗 Original Source: View the official filing/article here.