SK hynix Shares Surge After Company Unveils 40 Trillion Won Buyback

SK hynix shares experienced an 8% increase in early trading on August 20 following the chipmaker's announcement of a significant buyback program. The company aims to buy back and retire 40 trillion won worth of its own shares, comprising 3.3% of total outstanding shares. This move is interpreted as a strong indicator of management's confidence in the company's long-term cash-generating ability.

The buyback will occur between August 20 and November 19, with all shares expected to be retired within a fortnight post-purchases. According to Samsung Securities, the expanded shareholder-return policy could boost earnings per share due to a reduction in outstanding shares. Hanwha Investment & Securities estimates the company's shareholder-return resources might reach about 245 trillion won during the policy period, suggesting a significant enhancement in shareholder value.

The decision to keep the upside of shareholder returns open-ended, unlike the company's previous policy, is seen as a positive move by brokerages like NH Investment & Securities. Despite the enthusiasm, major brokerages did not immediately revise price targets post-announcement, indicating that analysts believe the company's robust fundamentals are already reflected in their existing valuations.