JPMorgan and Goldman Sachs Decode SK Hynix's Record-Breaking Buyback
Nashnova编辑部
SK Hynix announced a KRW 40 trillion share buyback and cancellation — the largest ever by a Korean listed company; JPMorgan and Goldman both issued same-day buy ratings, calling it the starting point of an escalating shareholder-return story, not the finale.
KRW 40 trillion — how big is this buyback?
SK Hynix announced after market close on August 19 that it will buy back and cancel 24.07 million shares worth KRW 40 trillion (~$28.9 billion), or 3.3% of shares outstanding.
This is the largest buyback in Korean corporate history. The amount equals 63% of trailing-twelve-month free cash flow (operating cash flow minus capex).
This means → the company is handing back nearly two-thirds of the real cash it earned over the past year, far exceeding its prior policy ceiling.
From "up to" to "at least" — why does one phrase matter?
The most important policy shift: the shareholder-return commitment moved from "up to 50%" to "at least 50%" of free cash flow.
JPMorgan analyst Jay Kwon called the wording change "a substantive policy upgrade." In plain terms = what used to be a ceiling is now a floor — returns can only go up from here.
The announcement also landed more than a month ahead of the market's late-September expectation. This reflects management's high confidence in its cash-generation trajectory.
How does JPMorgan do the math?
JPMorgan forecasts cumulative 2025–2027 free cash flow at KRW 47.5 trillion.
After subtracting the KRW 40 trillion buyback, a minimum KRW 4 trillion in dividends, and the KRW 12 trillion cancellation announced in February, at least KRW 18 trillion in additional returns remains through end-2027 — over 16% of the current market cap.
This means → even at the new policy floor, shareholders stand to receive another one-sixth of market cap in payouts over the next 18 months.
Why does Goldman call this an "appetizer"?
Goldman analyst Jerry Shen forecasts 2025–2027 cumulative free cash flow at KRW 25.2 trillion and expects an additional ~KRW 7 trillion in buybacks beyond the current KRW 40 trillion program.
Combined, the 2027 shareholder return yield reaches 8%. Goldman raised 2026–2028 EPS estimates by up to 10%.
Goldman's target price: KRW 3.5 million, implying roughly 133% upside from the current KRW 1.491 million, noting "the company is printing cash far faster than the market realizes."
The stock is down 49% — is this the bottom?
SK Hynix shares have fallen 49% from the June 22 peak. The stock now trades at an annualized P/E of just 3.8x.
JPMorgan maintains a target of KRW 2.75 million, based on 7x average 2026–2027 EPS, stating "the worst is behind us."
In plain terms = both banks' models converge on one question: is 3.8x P/E a true floor? The answer hinges on the return roadmap at the Q3 earnings call.
What to watch next?
Q3 earnings call (before end of October): will disclose fuller shareholder-return details; JPMorgan expects a special dividend arrangement.
HBM contract price update (before end of September): directly affects forward profit and cash-flow expectations.
SK Hynix U.S. subsidiary IPO update (next month): if it advances, it opens an additional valuation channel.
Content is for reference only, not financial advice.