SK hynix Delays Shareholder Returns Amid ADR Constraints, Undervaluation Fears Grow

*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an "artificial intelligence (AI)-based personalized news recommendation and summarization service" developed with support from the Korea Press Foundation. It selects and provides six customized news items by reader type.

1. hynix, With Disclosure Restrictions Lifting, to Play Shareholder Return Card?

- Key Summary: SK hynix has been confirmed unable to announce specific shareholder returns until the 4th of next month due to the impact of its U.S. American Depositary Receipt (ADR) listing. Listed companies that conduct a public offering of new shares on the U.S. stock market are subject to a 25-day prospectus delivery obligation from the trading start date, and disclosing material information such as share buybacks or special dividends during this period could result in class action lawsuits. The stock plunged after the company gave a general answer that it was "reviewing various methods" during a conference call, and Kim Kyu-sik, former chairman of the Korea Corporate Governance Forum, pointed out that compared with Micron, the cause of the undervaluation is "attitude, not performance." That day, SK hynix closed at 1.322 million won, down 5.64% from the previous day, and has fallen 50.11% over the past month.

2. Samsung: "Q3 HBM4 Revenue to Triple... Memory Shortage to Intensify Further"

- Key Summary: Samsung Electronics recorded second-quarter consolidated revenue of 171.4995 trillion won and operating profit of 89.4924 trillion won amid surging demand for artificial intelligence (AI) chips, securing first place among global companies. The semiconductor (DS) division accounted for 99.7% of total profit, and the company maintained market leadership through expanded supply of HBM4, its sixth-generation high-bandwidth memory (HBM), and sample shipments of HBM4E. Kim Jae-jun, head of strategic marketing at Samsung Electronics' Memory Business Division, said, "Third-quarter HBM4 revenue will increase more than threefold from the previous quarter," and stated that the memory supply shortage next year would intensify beyond this year's levels. However, the Device eXperience (DX) division posted an operating loss of 800 billion won for the first time since its integration in 2021, due to the impact of chipflation (a surge in semiconductor prices).

3. CXMT's Unrelenting Impact... Shakes SK hynix and Micron Stocks

- Key Summary: Foreign media analysis has emerged that the successful Chinese stock market listing of Chinese DRAM maker Changxin Memory Technologies (CXMT) led to sharp declines in the stocks of rivals including SK hynix and America's Micron. Hong Kong's South China Morning Post (SCMP) reported that CXMT surged 466% on its listing debut on the 27th, recording a market capitalization of 3.3 trillion yuan (about 701 trillion won). As a result, the Nasdaq 100 index fell about 10% from its peak, and the KOSPI, in which SK hynix and Samsung Electronics carry heavy weight, slid about 40% over the past month. In contrast, Britain's Financial Times (FT) analyzed that SK hynix's stock is undervalued at a price-earnings ratio (PER) of less than three times its expected earnings two years out.

4. Samsung Discusses Execution Plans Including Special Dividend... ADR Listing as Mid- to Long-Term Card

- Key Summary: Samsung Electronics is discussing specific execution plans, including a special dividend, while carrying out its existing three-year shareholder return policy as scheduled. Park Soon-cheol, Samsung Electronics' chief financial officer (CFO and executive vice president), said during the second-quarter earnings conference call, "We plan to implement the three-year shareholder return policy as promised." The company's second-quarter free cash flow (FCF) was tallied at 90.97 trillion won, based on operating cash flow minus acquisitions of tangible assets, and it has left the American Depositary Receipt (ADR) listing as a mid- to long-term option without pursuing it immediately. However, it explained that the possibility of domestic shareholders being sidelined due to price differences between ADRs and domestic common shares is also under review.

5. As Global High Interest Rates Loom... Authorities Add to Interest Burden

- Key Summary: Following the U.S. Federal Reserve's hawkish rate hold, the yield on 30-year U.S. Treasury bonds exceeded 5.2% per year, marking the highest level in 19 years since July 2007. Lee Eok-won, chairman of the Financial Services Commission, appeared before the National Assembly's National Policy Committee and reiterated the total volume regulation policy, saying, "The separation of real estate and finance is my conviction." Amid this, KB Kookmin Bank raised its household loan interest rates by up to 0.5 percentage points, and the possibility of the Bank of Korea raising its base rate next month was also raised. The Financial Services Commission is reviewing a plan to exclude group loans from total volume management, but concerns over intensifying loan competition are also emerging.

6. Forced Liquidations Hit Highest in Three Weeks... "Debt Investing" on Alert After Two Straight Days of Plunges

- Key Summary: As domestic stocks plunged with the unprecedented triggering of circuit breakers for two consecutive days, forced liquidations by individual investors who invested with borrowed money are pouring out. According to the Korea Financial Investment Association, the amount of forced liquidations in brokerage trading as of the 29th was 61.1 billion won, the largest since July 9. As of the same day, the outstanding balance of credit trading loans was 32.995 trillion won, and brokerage receivables were 1.2 trillion won. The securities industry is on guard against a vicious cycle in which an increase in forced sale volumes leads to further declines and additional forced liquidations.