SK hynix: Cash Generation to Support Expansion and Shareholder Returns
Analysis date
Published
MW GOBLIN · AI company research
As of 2026-10-01, growth in the core business is positive. However, the share price of 1,783,000 won corresponds to a reference P/B of 4.31x that reflects only the capital increase. The key to assessing value is recurring cash generation sufficient to support the 61.4177 trillion won investment plan and share repurchases.
Toss Securities
Quote September 30, 2026 at 19:59 KST
Retrieved October 1, 2026 at 00:56 KST
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Price increases drive core business profits
Expanded sales of HBM and server memory, along with rising prices for commodity products, increased profits. According to the company, in Q2 2026 the average selling price of DRAM rose by the mid-30% range and NAND by the mid-50% range from the previous quarter. Consolidated revenue of 79.32 trillion won and operating profit of 60.54 trillion won support this. However, the first-half gain of 63.18 trillion won from valuation of financial instruments was not a cash inflow, so treating all net income as recurring earning power could overstate it. [1]
Assess cash generation alongside the cost of share cancellation
Subtracting 18.99 trillion won of purchases of property, plant and equipment and intangible assets from first-half 2026 consolidated operating cash flow of 91.74 trillion won leaves 72.75 trillion won. Excluding 13.98 trillion won of dividends received as well leaves 58.76 trillion won, so capacity for investment and shareholder returns depends on recurring cash generation. The approximately 40 trillion won acquisition of 24.07 million shares, decided on August 19 for cancellation, also reduces cash. The acquisition period is August 20–November 19; the shares are not treated as already cancelled. [1][3]
Combined investment plans for three businesses total 61.4177 trillion won
Expansion provides a foundation for growth but also uses funds available for shareholder returns. The overall plans are 35.2246 trillion won for Yongin Phase 2, 19.10 trillion won for Cheongju M17, and 7.0931 trillion won for PT7, totaling 61.4177 trillion won. Their expected completion dates are October 2031, April 2031, and December 2032, respectively. PT7 is the total amount for the project that began in November 2025, after the increase. The disclosures do not provide amounts already spent, so the total cannot be treated as future remaining expenditure or annual investment. [4][5][6]
Reference P/B of 4.31x reflecting the capital increase
The share price of 1,783,000 won corresponds to a reference P/B of 4.31x that reflects only the capital increase. Adding the July 14 capital increase proceeds of 39.89 trillion won to controlling equity of 262.38 trillion won at the end of June, then dividing by 730,492,365 shares issued, gives BPS of 413,791 won. This is based on equity after liabilities are reflected and excludes issuance costs, second-half earnings, and treasury share transactions. Memory profitability and cash generation after expansion must persist to support the high multiple. [1][2][3]
What could change the thesis
- Strengthening the assessment: If increased HBM and server memory shipments and maintained prices lead to cash generation that exceeds the increase in capital expenditure, the assessment of sustainable earning power improves.
- Weakening the assessment: If memory price declines and increased expansion spending reduce cash after investment, expectations for per-share value should be lowered despite the cancellation plan.
Sources and Evidence
- SK hynix 2026 Half-Year Report ↗2026-08-14 · II.2; consolidated financial statements; Notes 19, 24 and 30
- SK hynix Securities Issuance Results Report ↗2026-07-15 · I offering overview; II payment; VI funds raised
- SK hynix Decision on Share Cancellation ↗2026-08-19 · Items 1–7 and 11: changes in quantity and amount
- SK hynix Yongin Phase 2 Construction Investment ↗2026-08-07 · Item 2 investment amount; item 4 duration; item 7 potential changes
- SK hynix Cheongju M17 Construction Investment ↗2026-08-07 · Item 2 investment amount; item 4 duration; item 7 potential changes
- SK hynix Cheongju PT7 Investment Increase ↗2026-07-22 · Item 2 total investment; item 4 duration; item 7 resolution to increase
This AI-generated report is for information. Check the analysis date and primary sources. Terms