JPM SK hynix W40trn buyback

J P M O R G A N Asia Pacific Equity Research 20 August 2026

SK hynix Overweight 000660.KS, 000660 KS W40trn buyback has arrived sooner than expected; Price (19 Aug 26):W1,491,000 Price Target (Jun-27):W2,750,000 what's next for the stock

SK Hynix formally announced the long-awaited shareholder return policy, where Technology - Semiconductors the company plans to buyback and cancel W40trn of treasury shares to boost Jay Kwon AC shareholder returns over the next 3 months. Consequently, this share buyback plan ( announcement is consistent with our view that an announcement was imminent within the next two months with more details likely to be shared during the 3Q26 J.P. Morgan Securities (Far East) Limited, Seoul Branch earnings call. Overall, we view this progressive buyback announcement as positive Sangsik Lee for the stock sentiment given the size and duration of the buyback and expect the ( company to pursue additional shareholder returns over the next 2 years. Following this announcement, we believe the worst is behind us and expect share price J.P. Morgan Securities (Far East) Limited, Seoul Branch sentiment to improve gradually from a medium-term horizon and recommend investors to accumulate the stock. Neelay Y Kamath ( • W40T buyback - awaited corporate action has arrived sooner than J.P. Morgan India Private Limited expected. After the market close on 19 August, SK Hynix disclosed plans for the buyback and cancelation of W40trn worth of shares (3.7% of market cap as of 19 August) equivalent to 24.07M shares (3.3% of issued shares as of 2Q26-end). Additionally, SKH disclosed that it plans to allocate “50% or higher” of its accumulated FCF in 25A-27E to shareholders (link), which we view as a major step-up from sharing “up to 50%” of cumulative FCF announced back on 27 November 2024. Given the unprecedented FCF expectations over the next 3 years, SKH announced plans to pursue additional shareholder returns through a combination of treasury stock acquisitions, cancellations, and dividends, considering cash flow, market conditions, and distributable profits with a more detailed commentary during the 3Q26 earnings conference. Overall, we see this shareholder return as a positive which has arrived much sooner than expected (end of September), and we expect this proactive corporate action to boost share price sentiment in the near term. • Our view on the W40T share buyback. The W40trn buyback and cancellation is the largest among South Korean listed companies and is relatively higher than the recent share buyback announced by its peer Kioxia (report), in our view. In addition, the US$28.9bn share repurchase announcement is also higher than the ADR share cash raised by SKH in the US, where the company raised ~US$26.5bn back in early July. Of note, the W40T amount accounts for 63% of FCF (OCF – Capex) on a trailing 12M basis and is higher than the previous <50% FCF payout policy, in our view. Based on our calculations, the company currently trades at 6.4x P/E (based on trailing 12M adjusted EPS) and 3.8x P/E (based on1H26 annualized adjusted EPS), respectively. Such a P/E valuation could be considered a benchmark where SKH management would consider executing a buyback, in our view. • Key implications from the shareholder announcement. We believe the key takeaway from yesterday’s shareholder announcement is the “lifting of the ceiling on the amount of shareholder returns from <50% of accumulated FCF to >50%”, which is a meaningful step-up from the traditional shareholder return policy. Some investors pointed out that SKH’s plan is still relatively conservative compared to U.S. memory peers’ shareholder return guidance of returning 100% of excess cash (definition of excess cash is unclear, in our

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Jay Kwon AC Asia Pacific Equity Research ( August 2026 JPMORGAN

view). We would like to highlight that the SKH team has committed 39.4mn shares cancellation (15.3mn shares cancellation announced in Feb-2026 and 24.07mn shares buyback with cancelation announced yesterday) in the last 8M, which is viewed to be the most aggressive among…