SK Hynix will accelerate its 40 trillion KRW stock buyback and cancellation plan; raising the shareholder return target to "at least 50% of free cash flow".

Considering the company's business competitiveness, cash generation capability, and mid-to-long-term growth prospects, the company believes its current stock price fails to fully reflect its intrinsic value.

I personally forecast the 2027 expected P/E ratio: 6.0–6.3x; ADR fair price: approx. $228–$255.

Overall, we predict the return scheme is, "prioritizing share buybacks and cancellations when the stock price is significantly below intrinsic value, while supplementing cash returns with special dividends, and increasing the free cash flow return ratio to a more stable level." This is very close to the resolution currently announced.

Share Buyback and Cancellation

- On August 19, the board approved the repurchase and cancellation of treasury shares worth 40 trillion KRW, accounting for approx. 3.3% of total issued shares.

- The buyback will begin on August 20 and last for about three months, after which all acquired shares will be cancelled.

We previously predicted buybacks of 30–50 trillion KRW over two years with full cancellation; the forecast was basically accurate, and in reality, this pace is faster than expected.

Accelerating Implementation of Shareholder Return Policy

- The company is accelerating the implementation of its existing policy to return 50% of cumulative free cash flow generated between 2025 and 2027.

Upgraded from "up to 50% of cumulative free cash flow" to "at least 50%."

We had previously predicted an increase to 65%–70%; stating "at least 50%" is directionally correct, and I actually think this result is quite flexible with a higher upper limit.

Next Steps

- SK Hynix plans to combine share buybacks and cancellations with cash dividends, while considering measures to expand dividends, including increasing fixed dividends and special dividends.

- The specific scale and structure of additional shareholder returns will be decided by the board of directors and announced alongside the company's Q3 earnings results.

$SK Hynix(SKHY.US)$Roundhill Memory ETF(DRAM.US)