Brokerage analysts forecast that Samsung Electronics and SK hynix, riding record earnings, have room to carry out an additional 120 trillion won in shareholder returns combined. The amount was estimated at 80 trillion won for Samsung Electronics and 40 trillion won for SK hynix. Analysts say that if cash built up from higher profits is used for larger dividends and share buybacks and cancellations, it could become a turning point at which corporate value is reassessed.
KB Securities projected the two companies' room for additional shareholder returns on the 27th. SK hynix will release confirmed third-quarter results on the 28th and Samsung Electronics on the 29th. The financial investment industry is watching whether specific plans to expand returns will be presented on the conference calls held right after the earnings releases.
What has raised expectations of returns is the steeply rising profit. Samsung Electronics' preliminary third-quarter results, released earlier, were revenue of 195 trillion won and operating profit of 107.4 trillion won. The consensus compiled by financial information provider FnGuide for SK hynix's third-quarter results is an average operating profit of 76.964 trillion won and revenue of 98.2257 trillion won. If that holds, the two companies' combined operating profit would be about 184 trillion won, and SK hynix's operating margin would reach about 78.4%.
Expectations for earnings over the next few years are also high. According to brokerage estimates, KB Securities projected the two companies' combined operating profit for 2026-27 at 1,571 trillion won. That is 2.1 times the 748 trillion won of operating profit accumulated over the 26 years from 2000 to 2025. For 2027 alone, it expects 555 trillion won for Samsung Electronics and 389 trillion won for SK hynix, up 51% and 50%, respectively, from a year earlier.
Samsung Electronics said in August that it would carry out shareholder returns of 90 trillion to 110 trillion won this year. KB Securities said that if the remaining funds for returns are put at 110 trillion won, 70 trillion won in cash dividends and 40 trillion won in share cancellations, among others, would be possible. Subtracting the 30 trillion won in cash dividends already confirmed as of the third quarter, the amount that can still be returned comes to 80 trillion won.
Because the 2024-26 shareholder return policy ends this year, the new policy to apply from next year is also a point of interest. KB Securities estimated that if Samsung Electronics maintains its existing approach of returning 50% of free cash flow (FCF) to shareholders in 2027-29 as well, the scale of returns would grow more than fourfold, from the existing 140 trillion won to about 600 trillion won.
SK hynix is also cited as a candidate for additional share buybacks and cancellations and for larger special dividends. The company completed purchases of about 40 trillion won worth of shares for cancellation on the 21st. In light of its existing policy of returning at least 50% of free cash flow to shareholders in 2025-27, KB Securities analyzed that there is room for an additional 40 trillion won in returns.
Kim Dong-won, head of research at KB Securities, said, “Considering the abundant cash-generating capacity from record earnings, an additional 40 trillion won in shareholder returns looks possible going forward,” adding, “We judge that this will serve as a key driver of a corporate value re-rating, as the fruits of earnings growth are linked to expanded shareholder returns.”
However, despite expectations of record earnings, both companies' share prices have been pushed far down from their June highs. Samsung Electronics hit a record high of 374,500 won intraday on June 19 and then fell 49.48% to 189,200 won on July 29. Its close of 222,000 won on the 27th is also 40.72% below the peak. SK hynix likewise plunged 60.80% from 2,987,000 won intraday on June 25 to 1,171,000 won on the 23rd, and its close of 1,341,000 won on the 27th is 55.11% below the peak.
Recent share prices of large-cap semiconductor stocks have been affected by concerns that large-scale investments by AI (artificial intelligence)-related companies could increase profitability and financial burdens, as well as by a broad correction in the domestic market. In SK hynix's case, news that listing its U.S.-based grandchild company Solidigm is under review added concern that a duplicate listing could damage shareholder value.
Some also point out that the end of large share buybacks has created a supply-demand burden. SK hynix bought 24.07 million of its own shares, spending about 40 trillion won, through the 21st. It finished the purchases about a month ahead of the original schedule, which had run through Nov. 19. Samsung Electronics also acquired 56.85 million of its own shares for about 15 trillion won from Aug. 24 through the 6th of this month.
With both companies having completed share buybacks worth 55 trillion won, market attention is on whether additional return measures can lift share prices again. KB Securities put the two companies' price-to-earnings ratios (PER), based on 2027 earnings forecasts, at 3.2 times for Samsung Electronics and 2.7 times for SK hynix. Kim explained, “At a time when record earnings coexist with historically low valuations, the largest-ever expansion of shareholder returns is expected to be a decisive opportunity to resolve the undervalued corporate value.”