SK Hynix Rallies After $28.9 Billion Buyback Plan, With Monday Trade in Focus

Shares rise 2.31% on Friday, trimming the weekly loss to a 5.17% rebound

Brokerages see better trading support, but profit-taking may cap gains

Attention is turning to SK Hynix’s trading on Monday after the stock rebounded following the company’s announcement of a 40.0043 trillion won ($28.9 billion) share buyback and retirement plan. Brokerages say the large shareholder-return program could bolster near-term trading support, while cautioning that some investors may lock in gains because part of the announcement’s effect has already been reflected in the stock.

According to data compiled by Hankyung Epic AI on Aug. 23, SK Hynix closed at 1.73 million won on Aug. 21, up 2.31% from the previous session. The stock swung sharply during the day, falling to as low as 1.669 million won before rebounding to 1.773 million won. For the third week of August, it rose 5.17%.

The rebound followed the buyback announcement. In a filing after the market closed on Aug. 19, SK Hynix said it would purchase 24.07 million common shares on the open market for 40.0043 trillion won ($28.9 billion) and retire all of them. The purchase period runs from Aug. 20 through Nov. 19. The shares are equal to about 3.3% of those outstanding.

Brokerages said both the size and timing were stronger than expected. Hana Securities analysts Kim Rok-ho and Park Gyu-yeon wrote that the buyback exceeds the 20 trillion won to 30 trillion won range that had been discussed in the market. Samsung Securities analysts Lee Jong-wook and Kim Kyung-bin highlighted that it would mark the biggest treasury-share retirement by a domestically listed company.

The impact on trading flows is also drawing attention. NH Investment & Securities analyst Ryu Young-ho estimated the company could buy an average of about 645 billion won ($466 million) of shares per trading day during the purchase period. IBK Investment & Securities analysts Kim Woon-ho and Ko Hyuk-jin said the daily purchase cap amounts to 42% of the average daily trading volume over the past month, a level they said could signal the start of a rebound in the stock.

The move also stands to lift per-share value. Hanwha Investment & Securities analysts Park Jun-young and Kim Na-woo said that, based on the Aug. 19 closing price of 1.5 million won, retiring all of the repurchased shares would increase earnings per share by about 3.8%.

Earnings expectations are also supporting the shares. Eugene Investment & Securities analyst Son In-jun said delays in HBM4 shipments and the price gap in commodity DRAM, which weighed on second-quarter results, should largely normalize in the third quarter. KB Securities analysts Kim Dong-won, Lee Chang-min and Kang Da-hyun also cited new HBM4 mass production and worsening memory supply shortages as positives.

Still, further gains on Monday are not assured. The stock has already rebounded since the buyback announcement, and short-term profit-taking could emerge after the recent jump. Revisions to earnings estimates tied to a stronger won, along with moves in global semiconductor shares, remain variables. BNK Investment & Securities is maintaining a relatively cautious stance. It said the stock could rebound from short-term oversold levels, but upside may be limited if concerns about slowing demand persist.

Lee Song-ryeol, Hankyung.com reporter yisr0203@hankyung.com