SK Hynix Posts Record Profit, Plans 100 Trillion Won Payout
The South Korean chipmaker's quarterly sales passed 100 trillion won for the first time, and its shares closed 10.89% higher.
SK Hynix shares closed 10.89% higher on Wednesday after the South Korean chipmaker reported record third-quarter profit. It also announced plans to return about 100 trillion won to shareholders. Kospi, the benchmark index, finished 6.63% higher.
Revenue came in at 104.62 trillion won, or $78.86 billion, against 98.34 trillion won expected in LSEG SmartEstimates. Operating profit was 83.33 trillion won against 76.72 trillion won expected. Quarterly sales passed 100 trillion won for the first time.
Revenue rose 327.9% from a year earlier and 31.9% from the previous quarter. Operating profit climbed 632.1% year on year and 37.6% quarter on quarter.
Shareholder returns
The 100 trillion won return includes at least 30 trillion won in cash dividends and 60 trillion won in share buybacks and cancellations. The board approved a third-quarter dividend of 14 trillion won, with a special part funded by gains on the company's investment in Japanese chipmaker Kioxia.
SK Hynix will also buy back 20 trillion won of shares, half of them to be cancelled this year. That follows a 40 trillion won buyback finished last week, which will be cancelled shortly. The company plans to raise its shareholder return target to more than 50% of cumulative free cash flow generated between 2025 and 2027.
CEO Kwak Noh-Jung said on the earnings call that financial market volatility and a correction in chip stocks led the company to halt its review of pre-IPO fundraising and IPO options for its U.S. subsidiary Solidigm.
Memory market
HBM4, the sixth generation of high-bandwidth memory, began mass production and shipments in the third quarter. SK Hynix expects it to surpass HBM3E in both shipments and revenue in the fourth quarter as it ramps up output at its M15X facility in Cheongju. Average DRAM selling prices rose by a high-20s percentage from the previous quarter, and server DDR5 shipments rose more than 40%.
The company has long-term agreements with 14 major customers covering more than 50% of its 2027 and 2028 production capacity. It expects memory demand to outpace supply through 2030 and plans to raise investment significantly next year.
Mehdi Hosseini, an analyst at Susquehanna International Group, kept his neutral rating. He said he prefers Micron and Samsung Electronics, and that he favours SK Hynix's U.S.-traded ADRs over its Korean-listed shares.
Source: CNBC