SK Hynix Announces 40 Trillion Won Stock Buyback and Cancellation…Full-Scale Shareholder Return Begins

SK Hynix captured market attention by announcing a plan to cancel 40 trillion won worth of shares just 10 minutes after market closing. This cancellation is scheduled to proceed sequentially until November, clearly demonstrating the company's strong commitment to large-scale shareholder returns. Manager Choi Won-beom emphasized the significance of this announcement, stating, "Hynix's 40 trillion won stock cancellation this time, in a way, marks just the beginning."

Despite this shareholder return announcement being a major positive, a warning was issued about the potential for a short-term sell-off immediately after the announcement. Manager Choi Won-beom analyzed that stock price volatility could increase the next day, and a temporary exit of major supply cannot be ruled out. Investors are advised to prepare for such short-term volatility. However, this is not expected to undermine the positive long-term effects of the shareholder return policy.

SK Hynix's 40 trillion won stock cancellation and sale process is scheduled to take place over approximately 62 trading days until November 19. This implies an average daily position change of about 620 billion won, which is expected to bring significant liquidity changes. Manager Choi Won-beom stated, "The goal is to complete it by November 19. So, it's August now. It requires 62 trading days. They have to sell 40 trillion won within 62 trading days," urging attention to the impact this period will have on the market.

Manager Choi Won-beom recommended adjusting the previous investment strategy of 51% for Samsung Electronics and 49% for SK Hynix to a 50:50 ratio starting today. This recommendation is based on the assessment that SK Hynix has shown a strong commitment to enhancing shareholder value, making up for recent shortcomings in its conference call. He explained, "Until very recently, I said I would look at Samsung Electronics and Hynix at 51% and 49% respectively, but from today, I will put them at 50:50," emphasizing a balanced approach to the two leading semiconductor stocks.

SK Hynix's free cash flow (FCF) for next year is projected to reach 250 trillion won. This suggests that the shareholder return could be at least 130 trillion won based on the median value. Manager Choi Won-beom explained, "The FCF alone is 250 trillion won. Free cash flow is 250 trillion won. This is an incredible figure. So, half of that means the shareholder return, if we take the median value, is at least 130 trillion won," stating that large-scale shareholder returns are expected through stock cancellation and plans to increase dividend payout ratios.

Regarding the recent short-term decline in large-cap semiconductor stocks, Manager Choi Won-beom flatly stated, "It means nothing," urging investors not to be swayed. He pointed out that equating current market conditions with past bear market formulas is an error, and a change in perspective on target returns for large-cap semiconductor stocks is necessary. He particularly emphasized the need to respond to the market in line with the 2026 tax law revision, adding that ignorance of uncertainty poses an even greater risk.

It was revealed that more than 3 out of 10 KOSPI and KOSDAQ listed companies in Korea have not paid dividends even once in the past three years. Manager Choi Won-beom criticized this situation, strongly stating that the South Korean stock market is at the level of a 'financial developing country.' He emphasized the importance of improving corporate governance and establishing a shareholder return culture, highlighting that investors should not only focus on corporate performance but also on companies that implement shareholder-friendly policies.

Manager Choi Won-beom strongly advised against investing in single leverage ETFs. He warned that such products are designed based on indices and carry structural risks that can lead to account losses converging to zero. He emphasized, "Don't invest in single leverage ETFs. Invest in other ETFs, like KOSDAQ or KOSPI," recommending cautious investment in general stocks on the KOSPI and KOSDAQ. He also added that investors should set aside excessive worries about market crashes and formulate their next investment strategies.

It was argued that the Bank of Japan would be better off implementing an interest rate hike in September rather than October. The logic is that with rising government bond yields, a preemptive rate hike should be undertaken to align with market changes. Manager Choi Won-beom stated, "A September rate hike is better than an October rate hike. It's better. Why? It's better to get it over with early," predicting that such an early hike could limit the risks of a yen carry trade unwinding.

An analysis suggests that the Korean stock market has secured downside rigidity ahead of the U.S. presidential election. Manager Choi Won-beom stated, "In the case of Korea, we have already undergone enough adjustments, so I don't anticipate any further significant corrections," assessing that the Korean stock market has already sufficiently adjusted, making further large-scale declines unlikely. With the impact of the Trump presidency and midterm elections, the U.S. is in an urgent situation regarding debt and government bond yield management, and foreign selling is also reaching its limit, making further large-scale outflows difficult.

The success of Unitree's listing on August 19 and SK Hynix's first-ever concrete shareholder return plan have become key market interests. Manager Choi Won-beom emphasized, "Today, two things became most important. First, the success of Unitree's listing. Second, SK Hynix's first-ever concrete plan for shareholder returns," noting that the market should watch the impact these two events will have.

Given the struggles of domestic secondary battery companies due to the price and performance competitiveness of Chinese battery firms, a shift in investment perspective towards Energy Storage System (ESS)-related stocks was recommended. Manager Choi Won-beom emphatically stated, "I do not take a view on secondary batteries. Companies that cannot transition to ESS will struggle," emphasizing that investing in companies quickly transitioning to ESS, like Samsung SDI, would be more advantageous than those focused primarily on electric vehicle batteries, such as LG Energy Solution.

Manager Choi Won-beom recommended adding new promising stocks rather than making additional purchases of currently held stocks (averaging down). He emphasized that investment in a single stock should not exceed 30% of the portfolio and advised that finding new opportunities is more efficient than aggressive additional purchases to lower average cost. He specifically said, "Buy new stocks. Those of you who currently hold stocks, especially, do not average down. It is naturally better to buy new ones," stressing the importance of diversification.

For robot stock investments, a selective approach was suggested: 'only invest in what's necessary.' This means carefully selecting stocks by focusing on the organic connection between industrial robots and semiconductors, rather than investing in all robot stocks. Expectations are growing for related beneficiaries as LG's robot hand approaches mass production. Manager Choi Won-beom emphasized, "The answer is to only invest in what's necessary. Only in what needs to be invested," highlighting the importance of distinguishing valuable stocks.

LinkSolutions is highly regarded as a potential pioneer in the 3D printing industry, where the production of customized humanoids and industrial robots is expected to increase. This is because LinkSolutions has already passed Boston Dynamics' quality test. Manager Choi Won-beom stated, "LinkSolutions is highly likely to become a pioneer. Why? Because they've already passed Boston Dynamics' qualtest, so properly watch LinkSolutions from tomorrow," emphasizing the company's technical superiority among domestic 3D printing firms.

In the semiconductor post-processing sector, Nepes is drawing attention as a key company for high-performance semiconductor packaging. As demand for high-performance semiconductors increases, the importance of packaging technology that can handle this is growing, and Nepes is fulfilling this role. Manager Choi Won-beom explained, "Nepes ultimately goes to packaging. As the semiconductor post-processing line becomes more and more entrenched in high-performance, packaging that can handle this is needed. Nepes performs that role," predicting that Nepes' position as the domestic leader in packaging will be further strengthened amid the return of overseas bases to Korea and increased investment.