After Samsung Electronics and SK Hynix recently announced their shareholder return policy, there are..

Knicks rise after successive shareholder returns announcement last week…Three down
“The possibility of expanding the incineration is open”

사진 확대 On the 24th, when the KOSPI started slightly lower, the status board of the dealing room of Hana Bank’s headquarters in Jung-gu, Seoul, shows the KOSPI, KOSDAQ, and won per dollar. [Yonhap News]

After Samsung Electronics and SK Hynix recently announced their shareholder return policy, there are mixed feelings about the rebound in stock prices. Unlike SK Hynix, which announced its plan to retire its treasury stocks, Samsung Electronics said that the absence of the plan affected it, but that expectations remain for the announcement of additional shareholder returns in the future.

As of 2 p.m. on the 24th, Samsung Electronics announced its shareholder return plan on the 21st and dropped 24,000 won (8.53%) from the previous day to 257,500 won. At the same time, SK Hynix also showed a rebound after the recent announcement of shareholder returns, but it is trading at 1,689,000 won, down 42,000 won (2.37%) from the previous day.

Eugene Investment & Securities pointed out that SK Hynix has an advantage in terms of supply and demand, such as the size of purchases compared to market capitalization, the ratio of transaction value, and whether to retire. However, Samsung Electronics also judged that a significant inflow of funds could continue even if only a part of the special dividend is reinvested.

Earlier, SK Hynix pointed out that the board of directors decided to acquire 40 trillion won worth of treasury stocks and incinerate all of them. It is to buy 24.07 million shares (40 trillion won), which is 3.3% of the market capitalization, on the market within three months and immediately incinerate them after completing the acquisition. In addition, the shareholder return ratio based on cumulative free cash flow (FCF) between 2025 and 2027 was also raised from “less than 50%” to “more than 50%.” It also analyzed that the company predicted that it would announce additional shareholder returns, including special dividends, at its performance presentation in the third and fourth quarters of this year.

In addition, Samsung Electronics also pointed out that it unveiled a total of 90-110 trillion won in shareholder return plans at its board meeting on the 21st. As of the third quarter of this year, a special cash dividend of about 30 trillion won will be confirmed by the board of directors in October, and the remaining 60 to 80 trillion won dividends and share incineration distribution will be decided by the board in January next year when the annual performance is confirmed. Separately, it was analyzed that it decided to purchase 15 trillion won of treasury stocks for the purpose of providing incentives for executives and employees.

사진 확대 Samsung Electronics and SK Hynix. [Yonhap News]

In this regard, Eugene Investment & Securities pointed out that unlike SK Hynix, Samsung Electronics did not mention the possibility of raising its existing shareholder return policy. It was pointed out that it was regrettable that it did not announce a plan to burn treasury stocks, which could more directly contribute to the stock price rise. However, it is expected to meet market expectations by gradually announcing additional shareholder returns in the future.

In this regard, Samsung Electronics’ remaining 60 to 80 trillion won is expected to be announced as a combination of special dividends and treasury stocks. As Samsung Life Insurance and Samsung Fire & Marine Insurance’s stake in Samsung Electronics is close to the 10% limit of the Financial Industry Act, the proportion of incineration could be lowered compared to dividends. However, ahead of Samsung Electronics’ treasury stock retirement in March, Samsung Life Insurance and Fire’s shares were subject to after-hours mass sales (block deals), and the possibility of expanding treasury stock retirement accompanied by additional stake sales was open.

Son In-joon, a researcher at Eugene Investment & Securities, said, “Both Samsung Electronics and SK Hynix have large-scale buyers confirmed by the end of the year,” adding, “As both companies have predicted that they will announce specific details of additional shareholder returns in the future, stock prices are expected to continue to rise through competition for shareholder returns between companies.”

Hana Securities also assessed that Samsung Electronics’ large-scale cash return supports the bottom of the index, but SK Hynix is ahead in execution speed and foreign supply and demand. Samsung Electronics’ shareholder return this year is about five times that of the previous maximum of 20.3 trillion won in 2020. Accordingly, the total amount is overwhelming, but the timing of the decline in distribution stocks is still open. On the other hand, SK Hynix pointed out that it will buy 40 trillion won and 24.07 million shares from August 20 to November 19 and incinerate them altogether. This is why the market is asking for speed along with size, according to the analysis.

Kim Doo-eon, a researcher at Hana Securities, said, “As Samsung Electronics’ announcement came after the end of the regular market on the 21st, the rise and fall on the same day cannot be seen as an evaluation after the announcement,” adding, “The first verification is early in the week of the borrower, and as foreigners account for 46% of Samsung Electronics’ common stock at the end of the second quarter, the direction of foreigners’ net purchase is important.”