In twelve days, the company made its two largest commitments in its history: 54.3 trillion won for two new fabs, then 40 trillion won for the largest share buyback and cancellation in the history of listed Korean companies. We assess the two decisions within a single financial framework, measure the market’s actual response using our price data, then return to the valuation model we published on the listing date.
SK Hynix announced on 19 August a share buyback (Share Buyback) and treasury share cancellation (Treasury Share Cancellation) worth 40 trillion won (~28.6 billion dollars), covering about 24.07 million shares, or 3.3% of its shares, to be executed over three months starting 20 August — the largest of its kind in the history of listed Korean companies, according to the Korean press. The announcement came just twelve days after approval of 54.3 trillion won of investment in two new fabs, bringing the company’s commitments over two weeks to 94.3 trillion won (~67 billion dollars) — against net cash of 69 trillion won at end-June. The fuel is a record quarter: revenue of 79.3 trillion won (+257% year-on-year) and operating profit of 60.5 trillion won at a 76% margin; net income of 93.9 trillion won includes 63.3 trillion won of non-operating investment gains, led by the exit from its Kioxia stake — so the “13-fold” rise in net income is not the right operating metric. The market was not initially enthusiastic: Seoul’s “+12%” jump on 20 August only put the share barely (+0.8%) above its 18 August close, while the ADS Premium to the Seoul share widened from ~18% on the listing date to ~31%. The receipt price today (156 dollars) is below the base-case range in our model published on the listing date (190–218 dollars) — meaning management is buying what the market refuses to price: cycle durability.
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