TradingKey - SK Hynix shares rallied sharply on Thursday, surging nearly 13% intraday after the company announced a 40 trillion won (approximately $29 billion) stock buyback and cancellation plan.

JPMorgan (JPM) further noted that following the announcement of this massive share buyback plan, SK Hynix could return at least $130 billion to shareholders by next year.

Source: TradingView

JPMorgan analyst Jay Kwon stated that the most noteworthy aspect of this plan is not merely the buyback amount, but that SK Hynix has revised its shareholder return policy. The company now commits to returning at least 50% of its cumulative free cash flow from 2025 to 2027 to shareholders, whereas the previous policy capped it at 50%. If future cash flows remain strong, the actual scale of shareholder returns could significantly exceed current plans.

Kwon estimates that by 2027, this means SK Hynix could add at least 180 trillion won, or about $130 billion, in shareholder returns beyond the announced plan. This amount is equivalent to about 16% of the company's current market capitalization. For SK Hynix, which has recently experienced a sharp pullback, potential large-scale capital returns are expected to provide new support for its stock price.

Against this backdrop, JPMorgan believes that the most difficult phase for SK Hynix may have passed, with medium-term market sentiment expected to gradually improve, and maintains an "Overweight" rating on the stock.

Meanwhile, the shareholder return plan of Samsung Electronics, another South Korean memory chip giant, has also drawn market attention. MoneyToday reported that Samsung is expected to finalize a shareholder return plan exceeding 100 trillion won following its board meeting this month, with plans to allocate about 50% of its free cash flow to shareholder returns.

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