“Samsung Electronics to return another 80 trillion won, SK hynix 40 trillion won” ... Hopes rise for 120 trillion won in shareholder returns

[Financial News] Samsung Electronics and SK hynix may make additional shareholder returns totaling 120 trillion won in the years ahead, according to a new forecast. The analysis says that, backed by cash-generation capacity stemming from record earnings, expanded dividends and share buybacks and cancellations could help resolve the undervaluation of both companies’ shares.
Kim Dong-won, head of KB Securities’ Research Center, said on the 27th of Samsung Electronics, “Assuming the remaining funds available for shareholder returns over the latest three-year period (2024–2026) amount to 110 trillion won, we estimate that shareholder returns totaling 110 trillion won would be possible, including 70 trillion won in cash dividends and 40 trillion won in share cancellations.”
Kim added, “Even excluding the 30 trillion won in cash dividends already confirmed as of the third and fourth quarters, an additional 80 trillion won in shareholder returns is expected going forward.”
He forecast that Samsung Electronics’ next round of shareholder returns would also increase substantially. He analyzed, “If the same policy of returning 50% of free cash flow is applied over the next three-year period (2027–2029), the amount of shareholder returns is expected to grow more than fourfold, from the previous 140 trillion won to around 600 trillion won.”
For SK hynix, he pointed to the possibility of additional share buybacks and cancellations and larger special dividends. Kim said, “Given the ample cash-generation capacity resulting from record earnings, an additional 40 trillion won in shareholder returns is expected to be possible in the years ahead,” adding, “The gains from earnings growth will translate into expanded shareholder returns and serve as a key driver of a reassessment of corporate value.”
The assessment is that share prices have not fully reflected the companies’ earnings-generating capacity despite earnings growth. Based on the 2027 earnings forecasts presented by KB Securities, the price-to-earnings ratios (PERs) are 3.2 for Samsung Electronics and 2.7 for SK hynix. Kim said, “Despite the expansion in both companies’ earnings-generating capacity, SK hynix and Samsung Electronics shares have fallen 41% and 56%, respectively, from their peaks and are now trading at PERs of around 3, having entered an unusually undervalued territory comparable to that during a financial crisis.”

[email protected] Choi Doo-seon Reporter