SK Hynix stock surges on 40 trillion won shareholder return plan; eyes on Samsung Electronics for over 100 trillion won

SK Hynix's stock price experienced a significant jump following the announcement of an unprecedented 40 trillion won shareholder return program. The plan includes the repurchase and cancellation of company shares, signaling a strong commitment to rewarding investors. This move comes as the company adjusts its shareholder return policy for the next three years, increasing the target to "over 50%" of its accumulated free cash flow (FCF). Previously, the policy was capped at 50% of FCF, suggesting increased confidence from management in future cash generation, particularly driven by the AI memory market boom.

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SK Hynix's cumulative FCF is estimated to reach approximately 491 trillion won over three years, and even with a minimum return rate of 50%, the total shareholder return fund will exceed 245 trillion won.

Analysts are now shifting their focus to Samsung Electronics, anticipating a similarly aggressive, if not larger, shareholder return policy. SK Hynix's enhanced policy is expected to return over 245 trillion won in total over three years, based on estimated FCF. The immediate 40 trillion won share buyback is seen as an early execution of this commitment. This strategic shift from a ceiling to a floor for shareholder returns is interpreted as a strong signal of the company's financial health and future prospects.

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Changing the standard to '50% or more' is symbolic. If cumulative FCF reaches 250 to 300 trillion won due to the continued AI memory boom, a considerable amount of cash will be returned to shareholders.

Market watchers predict that Samsung Electronics, which also adheres to a 50% FCF return principle, could announce an annual shareholder return package ranging from 100 trillion to 200 trillion won. This potential increase, driven by the recovery in the memory chip market, could be up to tenfold compared to previous policies. Experts believe such a substantial return could serve as a powerful catalyst for re-evaluating the company's overall valuation, potentially leading to a significant boost in its stock price.

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In the shareholder return policy to be announced soon by Samsung Electronics, the annual return amount is expected to increase more than tenfold compared to the past, ranging from a minimum of 100 trillion won to a maximum of 200 trillion won.