SK hynix to Cancel 40 Trillion Won in Treasury Shares... How Much Will Samsung Return?

Largest Ever Treasury Share Cancellation by a Listed Company
Focus on SK hynix's Second Round of Shareholder Returns in Q3
Samsung May Announce Policy as Early as This Month

SK hynix will acquire and cancel all of its treasury shares worth 40 trillion won. This marks the largest treasury stock cancellation in the history of Korean listed companies. Amid massive shareholder returns fueled by the artificial intelligence (AI) memory boom, attention is also turning to whether its competitor Samsung Electronics will follow suit with similar measures.

According to SK hynix on August 20, the company held a board meeting the previous day and approved the agenda for the acquisition and cancellation of treasury shares. Based on the closing price of 1,662,000 won per share as of the day before the board resolution, the planned acquisition amounts to approximately 24.07 million shares, which is about 3.3% of the total outstanding shares. The company plans to purchase the shares over a period of about three months starting from today and then cancel them all.

The rationale behind this move is that the current share price does not adequately reflect the company's cash generation capacity and long-term growth potential. As the AI memory market booms, both performance and cash generation have improved, with net cash at the end of the second quarter this year reaching around 69 trillion won. The company has also decided to raise its shareholder return policy from 'within 50% of cumulative free cash flow (FCF)' to 'at least 50%'. Going forward, SK hynix will pursue both treasury share acquisition and cancellation alongside cash dividends, and will consider increasing both regular and special dividends.

This has heightened market interest in the scale of additional shareholder returns to be announced at the third-quarter earnings release. Market observers have estimated that SK hynix could potentially return additional value to shareholders in the range of 40 trillion won up to as much as 100 trillion won. Given that next year's FCF is expected to rise even further compared to this year, analysts suggest that SK hynix may still have the capacity for additional shareholder returns even after cancelling 40 trillion won worth of treasury shares.

Meanwhile, market attention is shifting to Samsung Electronics. As Samsung Electronics has also benefited from growing AI memory demand, investors are now watching to see if the company will respond to market expectations through treasury stock purchases and cancellations or special dividends. With Samsung Electronics’ current three-year shareholder return policy ending this year, the company has stated that it is currently discussing its shareholder return strategy, which may include special dividends. Some market observers suggest that the outline of Samsung Electronics' new shareholder return policy could be revealed as early as this month.

This content was produced with the assistance of AI translation services.