SK Hynix (SKHY.US) has launched a substantial shareholder return plan! It intends to repurchase and cancel 40 trillion won worth of shares, returning over 50% of cumulative free cash flow.

South Korean memory giant SK Hynix (SKHY.US) announced on Wednesday that it will repurchase and cancel stocks worth 40 trillion Korean won (approximately $28.61 billion) and plans to return at least 50% of its cumulative free cash flow to shareholders by next year. The company believes that its current stock price does not fully reflect its value, which led to the decision to fully launch the shareholder return plan. As of the time of publication, SK Hynix's U.S. stocks gained over 4% in after-hours trading. It is reported that SK Hynix held a board meeting on Wednesday. Based on the closing price of 1,662,000 Korean won per share the previous day before the board meeting, the repurchase and cancellation of the 40 trillion won stocks corresponds to about 24.07 million shares, accounting for 3.3% of the company's total issued shares. SK Hynix stated that the stock repurchase will begin on August 20 and last for about three months, and all shares purchased will be canceled upon completion. This 40 trillion won stock repurchase and cancellation plan is the largest of its kind in the history of listed companies in South Korea. Moreover, SK Hynix has clearly stated that it will increase the scale of shareholder returns from the previous "within 50% of cumulative free cash flow" to "more than 50%." The methods of shareholder return will include a combination of stock repurchase and cash dividends, and the company also plans to explore expanding its dividend policy, including fixed dividends and special dividends. Earlier, in November 2024, SK Hynix announced that during the three years from 2025 to 2027, it would return 50% of its cumulative free cash flow to shareholders and indicated that if performance improvements significantly boosted free cash flow, the company would consider earlier shareholder returns. It is worth mentioning that earlier this month, SK Hynix announced a dividend distribution of 375 Korean won per share and expressed that it is actively assessing further measures to enhance shareholder value, with specific details to be finalized and announced in the third quarter. SK Hynix stated: "During the implementation of the policy, we will comprehensively consider cash flow, market conditions, and distributable profits to further enhance shareholder returns through a combination of stock repurchase and dividends." The company also added: "The specific scale and method of returns will be announced in the third quarter earnings report after obtaining board approval." Etoro analyst Josh Gilbert stated: "The scale of this stock repurchase by SK Hynix is a strong signal that meets investors' long-standing demand to utilize its growing cash reserves to enhance shareholder returns."