Will semiconductor stocks begin shareholder returns? Samsung Electronics and SK hynix open their cash coffers

[Financial News] Expectations are rising that Samsung Electronics and SK hynix may launch large-scale shareholder returns, boosting hopes for a revaluation of domestic semiconductor stocks. As cash generation has improved sharply on the back of an Artificial Intelligence (AI) memory boom, Samsung Electronics is preparing to announce a new shareholder return policy, while SK hynix is also expected to finalize additional shareholder return measures in the third quarter of this year.
According to the investment banking industry on the 10th, KB Securities projected that the scale of Samsung Electronics' new shareholder return policy, which it is expected to announce soon, could range from at least 100 trillion won to as much as 200 trillion won per year.
That would be more than 10 times larger than the current annual shareholder return amount of 9.8 trillion won. Kim Dong-won, Head of Research at KB Securities, said, "Even if the shareholder return amount is set at 100 trillion won, the dividend yield based on the current share price could exceed 7%." He added that "large-scale shareholder returns could become a key catalyst for a stock price revaluation."
KB Securities maintained its "buy" rating and target price of 600,000 won for Samsung Electronics. Expectations for aggressive shareholder returns at Samsung Electronics are being driven by sharply improved earnings and cash generation.
KB Securities estimated that Samsung Electronics' operating profit for the third quarter of this year will rise 817% from a year earlier to 11.2 trillion won. That would mark a record-high operating profit for four consecutive quarters since the fourth quarter of last year.
SK hynix is also moving quickly to expand shareholder returns. On the 7th, SK hynix disclosed that it was "actively reviewing additional shareholder return measures to enhance shareholder value" and that "specific details will be finalized and announced in the third quarter."
Compared with its earlier statement during the second-quarter earnings announcement that it would share a shareholder return plan within the year, the timing of the announcement has been brought forward.
In the market, a special dividend and treasury share buybacks and cancellations are being discussed as likely options. SK hynix has previously said it would use 50% of free cash flow (FCF) for shareholder returns. Securities firms expect SK hynix's FCF this year to reach the mid-100 trillion won range. The company already canceled 12.2 trillion won worth of treasury shares in December last year and expanded its annual dividend to 3,000 won per share.

[email protected] Kim Hyun-jung Reporter