SK海力士季度利润增7倍，宣布100万亿韩元股东回报计划

[music] Bloomberg Audio Studios podcasts radio news. [music] Welcome to the Daybreak Asia podcast. I'm Doug Krishnner. Today we begin in South Korea where the memory chip maker SKH posted a 7fold increase in quarterly profit. This company is also expecting the shortage in memory to last through 2030. For a closer look at what's happening, let's bring in Bloomberg's Yukyong Lee. Yukyouong covers Korean equities from our bureau in Seoul.

And she joins me now. Thank you for being here. Give me your sense about the big picture when it comes to SKH Heinix and what we learned from this earnings report.

Yeah, I think the biggest takeaway is that uh the earnings help the earnings conference call actually helped the investor concerns about the visibility of the future earnings. Um there were a lot of concerns to investors that whether the company can sustain the current strike of huge earnings growth because the memory industry has always been uh subject to this downturn cycle after some super cycle. So uh there were a lot of concerns about whether this massive earnings growth can be sustained.

However, I think the earnings conference call helped clear some concerns. Um uh one of the key highlights was that uh the company said his memories are mostly sold out through 2029 and mostly through the long-term agreements covering more than 50% of his memory volume. So that helped uh investors uh relieve that uh earnings through 2028 and possibly through 2029 could be pretty strong and I think that's why we are seeing a huge strong rallying almost uh almost 10 almost 9% today which is like a huge spike for the stock.

I was struck by the fact that SKH is forecasting persistent shortages in memory through 2030. Obviously this is being driven by the adoption of AI. There may be a question mark as to whether or not that trend is sustainable, but is it not incumbent upon SK to add a little bit more capacity in its production right now? Do we know anything about the plans for capex?

Yeah, the cap cape is another element that investors are keenly watching. uh uh and the company said it will drastically increase its capeex and expansion next year because it sees a really good virtual cycle of better AI services that's driving sales and further memory demand. So it didn't give a exact number for how much of the kax is spending. It's also going to uh build a new plant in in south of soul in Korea earlier than planned to meet the growing demand.

So we do know that the company is going to increase capeex drastically. Uh we don't know by how much but we do also have clarity about how much of the free cash flow the company is going to spend to return to shareholders today because they said uh it's 2026 shareholder plan will amount to 100 trillion one. So even though we don't have like an exact number for the kax plan we do have exact number for how much of the free cash flow that the shareholders will be getting.

And then that's another point that investors are cheering today.

What about the plan to return some cash to shareholders in the form of increased dividends? What's the plan here?

Yeah, that's another really uh that's a highlight from the today's uh earnings results. Uh the company uh in uh announced overall total 100 trillion one of shareholder return plan. That's about 75 billion uh included share buyback and dividends. And that's actually uh including earlier announced 40 trillion ones uh in share buyback which the company has already completed earlier this month and that's going to be in come in the form of dividend and share buyback and some of the dividends will be financed by the company's capital gains tech uh capital gains from its investment in Kyioia a Japanese uh flash memory maker uh the eskehines has invested in.

So uh some of them comes in the form of dividends and some of them come in the form of buyback. What's important here is that the expectations for shareholder return have been rising from the market and investor assess that the company's announcement today has met has been in line with what the company uh what the market has been uh expecting. So, it seems like it wasn't really overwhelmingly good uh overwhelmingly great shareholder return plan, but it did it come it came in line with investors expectations.

So, right now in Soul, we're seeing shares in SKH Highix up by more than 8% and I'm also seeing a similar gain for Samsung Electronics. Now, Samsung is obviously a much more diversified company. It has its fingers and hands in other pots, too. But if you were to compare and contrast just the memory chip business of Samsung with that of SKH Heinix, how would they stack up one against the other?

Yeah, that's a really good question. Both of the companies are seen as a a memory stock by the stock market investors. Um I think uh one key difference I would highlight is that uh a couple of years ago Samsung was seen as being left behind in the race for the cutting edge memory device called HBM that works to uh that's the key component for the AI accelerators um and uh and and and that that uh uh Samsung has been lagging behind but then it's been quickly catching up SKH highness in the HBM devices so it's been narrowing it technology ological elite uh gap with SKH Heinik.

So uh investor are assigning uh some of the investors seems to be uh seems to like Samsung uh more to give it to give credit to the company for being able to catch up quickly. Um uh but the c but it's also important to note that Samsung's uh semiconductor business also has non-memory business such as Foundry where it competes with the Taiwan's TSMC. So um uh which is also expected to uh turn to profit soon um from the loss making and uh Samsung is reporting his earnings results tomorrow uh just a day after SK high.

So uh and is also enjoying a broader um improvement in investor sentiment toward AI trade after some recent uh jitters about the uh worries uh coming from the worries of the AI funding have been relieved. uh so the both we are seeing both companies shares uh up more than like 8% today which is a huge rally but I think investors are also waiting to hear more from Samsung tomorrow on the shareholder return package that is going to announce so it's going to uh be a big tech earnings week this week

so yung maybe you can give me an overview of what's been happening so far this year when it comes to the equity market in South Korea I think if I go to my Bloomberg in dollar terms, the Cosby is up by more than 53%. Is this fundamentally a story about semiconductor makers and about the AI trade or is there something else going on here?

Yeah, you're right about that. It's it's mostly about the AI trade story and that AI trade story has attracted uh investors to pile into the chip makers that we talked about today, SK, Heinix, and Samsung. Um but the picture from the earlier this year and right now has changed dramatically from earlier this year before July we saw this uh word bidding beating rally in Cosby and the the index has uh nearly like nearly doubled this year alone before June but that's uh that was mostly driven by a lot of leverage from retail investors were piling into the memory memory stocks on the AI enthusiast IASM but now we are seeing a lot of that enthusiasm has transformed into some of the AI jitters and that led to the selloff in the memory stocks such as Samsung and SHA.

So the Korean uh equity benchmark cost Py also is down almost 40% from its June peak and that's been driven by the corrections in the stock prices of SK highness and Samsung. So even though yes the index is still up more than 30% if you see its performance in the last uh few months it has become the world's worst performing major equity index and that's been driven by heavy selloff by foreign investors who have been concerned about the sustainability of the AI earnings and also sustainability of the AI capeex spending by the US big tech uh companies um and we a