[Yonhap News Agency] 사진 확대 [Yonhap News Agency]

Samsung Electronics and SK hynix have unveiled an unprecedented shareholder return package. As the two semiconductor leaders drove KOSPI higher with a sharp rally in their stock prices, brokers said it is better to first confirm earnings, performance, and capital allocation trends rather than rush to reflect return expectations in target prices.

According to the industry on the 20th, SK hynix held a board meeting the previous day and decided to buy back and cancel treasury shares worth KRW 40 trillion. The company plans to purchase 24.07 million treasury shares on the open market in a staggered manner by Nov. 19, equal to about 3.3% of its outstanding shares. It will also expand shareholder returns from within 50% of cumulative free cash flow to more than 50% going forward.

Samsung Electronics is also expected to hold a board meeting soon and approve shareholder return measures centered on treasury share buybacks and cancellations, along with a one-time special dividend. Samsung Electronics is believed to have room for a special dividend of around KRW 100 trillion. The stronger cash-generating power comes as the memory semiconductor supercycle boosts earnings.

[News 1] 사진 확대 [News 1]

The shareholder return policies of SK hynix and Samsung Electronics lifted investor sentiment. On the KOSPI market that day, SK hynix closed at KRW 1,691,000 per share, up 12.73% from the previous session. Samsung Electronics also finished at KRW 271,000 per share, up 9.49%. KOSPI rose 5.89% from the previous session to 6,852.58.

Lee Jae-won, a researcher at Yuanta Securities Korea, said this was a case showing that improved earnings can translate into shareholder returns at a time when valuation burdens have grown due to rising market interest rates. He added that shareholder returns help limit downside risk and highlight upside potential.

Brokers said it is too early to conclude that stock prices will keep rising on shareholder returns alone. For shareholders, treasury share buybacks are a positive, but a company buying back its own shares does not automatically push the stock price higher. To avoid distorting market prices, buybacks are subject to certain limits on price and volume.

Lee Young-gon, Head of Research at Toss Securities, said, “Treasury share buybacks and cancellations are positive, but shareholder return policies alone are not enough to sustain a continued rise in stock prices.” He added, “They may support the downside, but further gains will ultimately depend on the core business, including growth in the high-bandwidth memory (HBM) market and greater investment in artificial intelligence (AI) semiconductors.”

This article has been translated by GripLabs Mingo AI.