Samsung Electronics' 40 Trillion Won Share Buyback Is Just the Beginning, Signaling Expanded Shareholder Returns

The recently announced 40 trillion won share buyback and cancellation is not merely a one-off measure, but the beginning of a shareholder return policy, according to an analysis. Choi Hyun-deok, CEO of MBN Gold, emphasized, "As I mentioned yesterday, this 40 trillion won buyback is not something they decided to do and then do it; it is, in a sense, just the beginning." This signifies the starting point of future shareholder return policies, with additional measures anticipated next week and in October.

The shift in the shareholder return policy stance is evident in the change of the free cash flow return rate to over 50%. Choi Hyun-deok, CEO, explained, "50% of free cash flow; until now, it was below, but now it's above, and that's the most important thing." This means that the 50% return rate, previously an upper limit, has become a lower limit. This reflects the company's long-term confidence in the memory market outlook and management's determination to overcome the limitations of the cycle industry. Such a change indicates the company's proactive stance on enhancing shareholder value.

An analysis suggests that approximately 100 trillion won in additional shareholder returns could be possible by 2027. Choi Hyun-deok, CEO, stated, "Out of 150 trillion, they did 40 trillion this time. Right? And then the regular dividends paid out from 2025 until next year. Yes. And then subtracting the shareholder returns already accumulated after 2025, about 100 trillion won remains. 100 trillion won. So they plan to do shareholder returns with that 100 trillion won." He calculated an approximate return scale of 150 trillion won based on projected operating performance from 2025 to 2027. Excluding this 40 trillion won, an additional capacity of about 100 trillion won arises, with specific allocation methods to be decided at the Q3 earnings announcement at the end of October.

Companies are focusing on securing resources for future investments while also prioritizing shareholder returns. Choi Hyun-deok, CEO, commented, "First, they are leaving money available for investment. Why? Because they are expanding until 2028, aren't they?" The plan is to use 50% of the anticipated 300 trillion won profit by 2027 for shareholder returns, while also sufficiently securing expansion costs for after 2028.

Samsung Electronics is set to announce its shareholder return policy through a board meeting at the end of this month, with market expectations projected to be at least 100 trillion won. Choi Hyun-deok, CEO, emphasized, "Samsung Electronics and Hynix saying they will buy back their own shares isn't about saving the KOSPI market; it means buying our stock." Due to the impact of the Financial Industry Structure Improvement Act, a dividend-centric policy is expected rather than share buybacks. This acts as a factor raising market expectations along with the company's willingness to boost stock prices.

Samsung Electronics' foundry division is pursuing price increases based on improved profitability. Choi Hyun-deok, CEO, analyzed, "The talk of raising prices now proves that the yield has improved that much." This is interpreted as a reflection of confidence through yield improvement, and ripple effects from TSMC's saturation are also anticipated. If foundry price increases materialize, Samsung Electronics' sales and operating profit are expected to rise together.

With the explosive increase in AI data center demand, strong memory prices are projected to continue long-term, beyond 2027. Choi Hyun-deok, CEO, mentioned, "The strong memory prices that began in the second half of 2025 are likely to continue beyond 2027." New fab construction takes 2-3 years, inevitably delaying supply expansion, and since AI data centers are long-term projects, demand is unlikely to decrease easily. Accordingly, it is observed that the strong trend that began in the second half of 2025 is highly likely to persist beyond 2027.

Hynix has unveiled a new optical communication technology, replacing traditional copper wires, in the international academic journal Nature. Choi Hyun-deok, CEO, explained, "Hynix this time unveiled a new optical communication technology in the international academic journal Nature, which transmits data with light instead of existing copper wires." This move aligns with NVIDIA's CPO (Co-Packaged Optics) transition, increasing interest in related beneficiary stocks such as RF Materials, Seojin System, and RFHIC.

Due to shareholder return policies, a minimum of 80 trillion won in buybacks is expected to be injected over the next three months. Choi Hyun-deok, CEO, said, "Due to the shareholder return policy, at least 80 trillion won in buybacks is expected over three months, and if we look to next year, several times more will be injected," expressing expectations for improved supply and demand due to shareholder return policies. The expected return rate, including dividends, is over 13%, which was emphasized as a more favorable investment alternative than other options like real estate.

An analysis suggests that Big Tech companies' expanded investments in AI infrastructure will continue despite the side effect of rising interest rates. Choi Hyun-deok, CEO, countered, "Because of Big Tech, interest rates have risen, so national bond yields have gone up. So it's continuously pressuring the government's fundraising capacity. Now that it's confirmed that you can make money with just AI infrastructure, everyone is scrambling to build it quickly, so will they stop just because interest rates go up a bit?" He explained that increased Big Tech bond issuance due to AI capex expansion leads to higher government borrowing costs, but it is difficult to curb AI infrastructure investments. As profit generation through AI becomes certain, companies are expected to continue investing despite interest rate hikes.

The Trump administration announced it would implement an "economic operation unprecedented in any country" against Iran. Choi Hyun-deok, CEO, emphasized, "As of today, an economic operation unprecedented in any country will be implemented. Such measures will isolate [Iran] in an unprecedented level of economic warfare. This will be more fearsome than missiles, because as time passes, it will become harder to maintain the regime." This is intended to cut off the funding sources of the Iranian Revolutionary Guard Corps, and combined with attempts to divert attention with talks with North Korea, it portends changes in the geopolitical landscape. Such powerful economic sanctions are analyzed to put significant pressure on the Iranian regime.

Despite news of Moderna's successful clinical trials, a warning was issued regarding surging related biotech stocks. Choi Hyun-deok, CEO, argued, "ST Pharm, which surged because of Moderna, stopped rising. I think all of this has become a resistance level. It can't go higher than this." While Moderna's clinical success is certainly good news, the surge in indirect beneficiary stocks like ST Pharm and Pharmicell is analyzed to be excessive. Accordingly, the necessity of managing risk by selling indirect beneficiary stocks was raised.

It has been confirmed that Alteogen's formulation change technology, SC, is being directly used in Moderna and Merck's cancer vaccine clinical trials. Choi Hyun-deok, CEO, stated, "Alteogen's technology is being deployed in Moderna and Merck's cancer vaccine clinical trials. Alteogen's formulation change technology, SC, is being co-administered in the clinical trials for Intismelan, a neoantigen immunotherapy jointly developed by Moderna and Merck." This means that Alteogen's technology is being used to convert MSD's Keytruda IV formulation to an SC formulation, thereby forming a direct revenue structure.

Positive evaluations of Alteogen from brokerages are expanding, and a milestone confirmation is expected in the third quarter of this year. Choi Hyun-deok, CEO, mentioned, "Many investment banks are now increasing their coverage of Alteogen at Kiwoom Securities. Last year, there were only about three," indicating a significant increase in the number of covered brokerages compared to last year. This expanded positive evaluation suggests growing market confidence in Alteogen's technology and business viability.

When investing in Hynix, it is crucial to comprehensively analyze not only its association with Big Tech companies like OpenAI but also to manage the credit risk of investment banks (IBs). Choi Hyun-deok, CEO, advised, "In reality, there aren't many people who check all these things one by one, including how IB companies raise and lower interest rates related to credit risk." He emphasized the importance of a broad analysis of the company's fundamentals and surrounding environment, rather than just short-term technology-driven leadership.

Specific figures for the humanoid robot business will be disclosed at Hyundai Motor's Investor Day next week. Choi Hyun-deok, CEO, stated, "At Hyundai Motor's Investor Day, those numbers will come out. Boston Dynamics is currently valued at around 45 trillion won, and if specific numbers are released through this Investor Day, there's a high possibility it will increase." The recent sharp decline in Unitree's stock price appears to be a correction after excessive gains, and Hyundai Motor plans to disclose its stake in Boston Dynamics and robot production figures. This, coupled with the unveiling of Tesla Optimus, is expected to make it a 'super week' for the robot sector.