#Gate股票观点挑战 $SK Hynix Goldman Sachs: SK hynix’s 40 trillion Korean won share buyback and cancellation leaves room for further shareholder-return actions

SK hynix’s 40 trillion Korean won buyback and cancellation—is this just the beginning? After the South Korean stock market closed on August 19, SK hynix unveiled a 40 trillion Korean won share buyback and cancellation plan. Based on the closing price on August 18, this represents approximately 3.3% of its outstanding shares.
Goldman Sachs followed up with a report that directly revised its earnings forecasts, raising its EPS forecasts for 2026 through 2028 by 4%, 10%, and 10%, respectively. More importantly, this buyback is not a one-off action. The company explicitly stated that more buybacks and dividend policies will follow, with detailed plans to be announced around its third-quarter financial report this year. Key details of the buyback plan: the buyback will begin on August 20 and is scheduled to be completed within three months, with no daily buyback volume set in advance.
The company’s rationale was straightforward: it believes the current share price does not accurately reflect its actual value, and that optimizing capital allocation through buybacks and cancellations will enhance shareholder value. Based solely on the number of shares, the buyback is expected to cancel approximately 24 million shares, already exceeding the 17.7 million shares issued in the company’s recent ADR listing.
Put plainly, this buyback will not dilute the interests of existing shareholders; instead, it can fully offset the impact of the share-capital expansion brought by the ADR issuance. Key upgrade to the shareholder-return policy: many people are focusing only on the 40 trillion figure and overlooking the company’s simultaneous update to its long-term shareholder-return rules. The original policy allocated 50% of cumulative free cash flow over three years to shareholder returns, but it has now been adjusted to “at least 50%,” with returns to be delivered through both share buybacks and cash dividends. The company also noted that it is considering increasing dividends, including both fixed and special dividends. Complete details of the return policy will be released around the third-quarter 2026 earnings call, likely in late October.
In terms of market expectations, based on the company’s quarterly dividend disclosure on August 7 and general industry discussions, most people had expected the new plan to be announced between late August and early September. The actual implementation came slightly earlier than expected, also showing the company’s strong willingness to advance shareholder returns.
An even more significant signal is that the company hinted that the additional returns in this round are not a one-time action and that related measures will continue to be introduced. Put plainly, this 40 trillion is just the first wave; more is to come. Revision of earnings forecasts and estimation of the scope for returns: Goldman Sachs also raised its EPS forecasts in the report. The adjustments were entirely attributable to the share-count reduction resulting from the buyback and cancellation, while its revenue and operating-profit forecasts remained unchanged. Following the revisions, the 2026 EPS forecast rose from 385,716 Korean won to 399,504 Korean won, the 2027 forecast from 446,813 Korean won to 491,918 Korean won, and the 2028 forecast from 510,395 Korean won to 560,997 Korean won, representing increases of 3.6%, 10.1%, and 9.9%, respectively.

Looking at the overall scope for shareholder returns, Goldman Sachs expects the company’s cumulative free cash flow from 2025 to 2027 to total approximately 252 trillion Korean won. Based on a 55% shareholder-return ratio, total returns are estimated at around 140 trillion Korean won. With the 40 trillion buyback already announced and approximately 30 trillion Korean won in cumulative dividends during the same period according to its model, roughly 70 trillion Korean won remains to be delivered through buybacks and cancellations during the current policy cycle. Based on the current market capitalization, this return scale corresponds to a shareholder-return yield of approximately 3.5% in 2026, rising to around 8% in 2027. The underlying logic amid the industry cycle: viewing this within the broader cycle of the memory industry makes the confidence behind it easier to understand. SK hynix is the global leader in the HBM market, the world’s second-largest DRAM supplier, and also one of the world’s leading NAND manufacturers.
Goldman Sachs believes in its report that the memory industry will remain in a strong upcycle throughout 2026. The core driver is the continued increase in AI-related capital expenditure by hyperscale cloud providers. Memory demand on the server side—including server DRAM, SOCAMM, HBM, and enterprise SSDs—is expected to grow significantly faster than supply. Financially, this translates into an explosion in profits and cash flow.
Goldman Sachs’ forecasts show that the company’s total revenue is expected to reach 345.48 trillion Korean won in 2026, up 255.6% year on year. EBITDA is expected to reach 281.9 trillion Korean won, with an EBITDA margin of 81.6%; net profit margin is expected to be approximately 77.1%. With profitability at this level, the company’s cash flow will be extremely ample. Free cash flow is expected to reach 74.93 trillion Korean won in 2026 and rise further to 149.45 trillion Korean won in 2027. Anyone familiar with the semiconductor industry understands that the memory industry is highly cyclical: during downturns, companies must tighten spending to withstand the cycle, while during upcycles, cash flow is realized rapidly.
SK hynix’s willingness to raise its shareholder-return ratio and launch a large-scale buyback ahead of schedule is essentially a sign of confidence in the strength and duration of this memory upcycle. In particular, the incremental earnings from its HBM business have made the company’s cash-flow visibility much stronger than in previous cycles. Evolution of the shareholder-return policy: Looking back at the evolution of the company’s shareholder-return policy, one can clearly see how its approach has changed. From 2019 to 2021, the policy focused on fixed dividends, with a fixed dividend of 1,000 Korean won per share and an additional 5% of free cash flow allocated to extra dividends. From 2022 to 2024, it was upgraded to allocate 50% of cumulative free cash flow over three years to shareholder returns, while the fixed dividend increased to 1,200 Korean won per share. Under the latest policy for 2025 to 2027, the company initially maintained the 50% ratio, but has now adjusted it to a minimum of 50% while increasing the proportion of buybacks, rather than limiting returns to cash dividends.
This evolution corresponds to the gradual improvement in the company’s earnings scale and cash-flow capacity. During an upcycle, when the company has ample cash flow, buybacks and cancellations increase shareholder value more directly than simple dividends and better reflect the company’s assessment of its own value.

Uncertainty factors on the industry side: Goldman Sachs set a 12-month price target of 3.5 million Korean won in the report, using the average P/E ratio for 2026 and 2027 as its valuation method and a target P/E ratio of 9x.
This valuation view represents the original institution’s opinion only and does not constitute investment advice. The report also mentioned several uncertainties on the industry side.
First, a significant deterioration in the supply-demand balance in the memory industry, or technological advances falling short of expectations;
Second, weakening end demand for smartphones, PCs, and servers, affecting overall demand for traditional memory;
Third, Samsung making faster-than-expected progress in its HBM business, changing the competitive landscape of the HBM market;
Fourth, a decline in AI-related capital expenditure, affecting overall HBM demand and, in turn, the company’s related revenue and profits. These uncertainties are also normal features of the memory industry. Technological advances, supply-demand mismatches, and competitors’ actions can each affect the timing of the industry cycle. How long this AI-driven memory upcycle can last will ultimately depend on the actual realization of end demand.

What do you think of this large-scale shareholder-return move by the memory industry leader?$SK Hynix ‌