SK hynix to buy back $28.6 bil. worth of shares in 3 months before cancellation

SK hynix said Wednesday it will buy back 40 trillion won ($28.6 billion) worth of its own shares within the next three months and will cancel them.

The chipmaker said in a regulatory filing that it will begin buying back 24.07 million common shares Thursday at 1.66 million won per share through open-market purchases and complete the program by Nov. 19.

This accounts for about 3.3 percent of the company’s 730 million outstanding shares. SK hynix plans to cancel all of the repurchased shares after completing the buyback.

“We believe our shares are currently undervalued and have decided to buy back and cancel 40 trillion won worth of treasury shares to efficiently reallocate capital and enhance shareholder value,” the company said.

“We are also considering measures to increase dividends, including higher regular dividends and special dividends.”

In a press release issued after the filing, the company said it has also renewed its November 2024 shareholder return policy, which promised to return up to 50 percent of its cumulative free cash flow (FCF) from 2025 to 2027, by raising the ratio to 50 percent or more.

SK hynix’s FCF stood at 24.8 trillion won last year, and brokerages expect the number will likely surge to 146 trillion won this year and 240 trillion won next year, according to market tracker FnGuide. If the company returns at least 50 percent of cumulative FCF as pledged, the amount available for shareholder returns could exceed 200 trillion won over the period.

The company said it plans to combine share buybacks and cancellations with cash dividends, as well as considering dividend expansion, including its existing fixed dividends and special dividends.

The 40 trillion won share buyback and cancellation plan is the largest of its kind among listed Korean companies, according to SK hynix. The company said it will continue shareholder returns while maintaining a stable financial structure, as it remains on track to meet its financial targets.

The announcement came after a sell-off that has continued since last month amid concerns that the artificial intelligence infrastructure boom may be nearing its peak, as well as disappointment that SK hynix did not unveil concrete shareholder return measures during its July 29 earnings announcement.

“During the policy period, we plan to pursue additional shareholder returns through a combination of share buybacks and cancellations and dividends, taking into account cash flow, market conditions and distributable profits,” SK hynix said. “The specific size and method will be announced at the time of our third-quarter earnings release.”