The three best reports selected by MoneyToday's securities department for the third week of August (18th–21st) are: △Park Jun-young, researcher at Hanwha Investment & Securities, '40 trillion won is just the beginning, expectations for large-scale share buyback and cancellation (SK Hynix)' △Han Seung-yeon and Oh Se-beom, researchers at NH Investment & Securities, 'Big Pharma, a preview 10 years from now (Biotech)' △Park Jong-dae, researcher at Hana Securities, 'Spending a historic year in the cosmetics industry'.
On the 19th, SK Hynix announced that it will return more than 50% of its cumulative free cash flow (FCF) by next year and simultaneously conduct a total of 40 trillion won in share buyback and cancellation along with dividends. Park Jun-young, researcher at Hanwha Investment & Securities, predicted that this 40 trillion won share buyback and cancellation is unlikely to be a one-time return. He anticipated further share buybacks and cancellations, which would lead to an increase in per-share value.
This report analyzed SK Hynix's shareholder return plan and maintained a target price of 3.15 million won with a 'Buy' investment recommendation. The report ranked among the top viewed reports issued during the week, drawing significant attention from investors.
The following is a summary of the report. ()
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SK Hynix's policy to return more than 50% of its cumulative free cash flow (FCF) from 2025 to 2027 is estimated to result in a total shareholder return scale of over approximately 245 trillion won. The company clarified that the final return amount will be determined based on the cumulative FCF over the entire policy period, rather than returning 50% of the FCF generated each year within that same year. Therefore, this 40 trillion won share buyback and cancellation is closer to an early execution of part of the total return funds for the three-year period, rather than a return specifically tied to 2026 FCF.
Even though the FCF for 2026 and 2027 has not yet been finalized, SK Hynix's proactive decision to implement large-scale returns demonstrates its confidence in future cash generation capabilities and achieving financial health targets. Moreover, since the company has effectively shifted the existing 50% from a ceiling concept to a floor concept, there is a high possibility that the actual shareholder return scale will exceed 245 trillion won.
Additionally, SK Hynix plans to allocate a significantly larger portion of future shareholder returns to share buyback and cancellation rather than dividends. Even if only half of the total return funds are used for share buyback and cancellation, the cumulative scale could exceed 120 trillion won. Focusing on the possibility that large-scale FCF generation will lead to over 100 trillion won in share buyback and cancellation becoming a reality, this is expected to result in a continuous reduction in the number of shares and an increase in per-share value.
Han Seung-yeon and Oh Se-beom, researchers at NH Investment & Securities, published a report after visiting a total of 12 Big Pharma and biotech companies in the U.S., reflecting on the mid-to-long-term future of Big Pharma. This high-quality report, spanning 142 pages, not only provides an overview of the entire biotech industry but also selected and analyzed seven domestic companies with global competitiveness.
They argued that a premium should be applied to the valuation (value) of domestic biotechs developing the first new drug (First In Class) for diseases previously considered incurable. Most domestic biotechs have adopted Best In Class development as their main strategy due to the high difficulty and significant failure risk associated with development. However, they emphasized that it is necessary to consider that a small number of domestic biotechs are investing in global top-tier R&D (research and development) and achieving results with Big Pharma. Furthermore, they expected that more innovative companies will emerge within the domestic industry if such investor recognition is supported.
The following is a summary of the report. ()
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Among domestic-validated biotechs (First In Class), 'Orom Therapeutics' and 'Algenomics' are recommended from a mid-to-long-term perspective. Both companies are leading global development in the protein degradation (DAC) and RNA editing (TSR) fields, respectively. Particularly, DAC is considered the next-generation version of ADC (antibody-drug conjugates), and Big Pharma companies that have lagged behind in the ADC field are choosing DAC as their next-generation strategy to make a comeback. This is significant because it opens up structural opportunities for Orom Therapeutics, which leads in DAC.
Hanwha BioPharma adopts a Best In Class strategy targeting 'FcRn inhibitor (Anti-FcRn)' for autoimmune diseases. Although numerous global companies have introduced domestic candidate substances, the substance receiving the highest valuation locally is Hanwha Bio's Imetroprubart (IMVT-1402). Global partner ImmunoBant has secured global rights and is currently conducting late-stage clinical trials.
ImmunoBant holds only Hanwha Bio's FcRn inhibitor pipeline as assets but is valued at approximately 13 trillion won on NASDAQ. While many domestic pharmaceutical companies and biotechs have previously exported technology globally, this is the only pipeline among domestically developed new drug candidates that has received a public valuation in the range of 10 trillion won locally. We judge this to be a period for resolving structural undervaluation after dispelling doubts.
Park Jong-dae, researcher at Hana Securities, analyzed that the Korean cosmetics industry is passing through its largest export momentum in history. He predicted that ODM, container, and trading vendor companies will record higher stock price increases than brand companies in the second half of the year. This diagnosis indicates that despite strong performance, the 12th-month forward PER (price-to-earnings ratio) remains around 10 times, providing ample room. With both EPS (earnings per share) and appropriate PER expected to rise, the stock price increase could be substantial.
In this report, Park researcher evaluated Q2 performance for a total of 15 cosmetics companies and included analysis of eight companies. Among them, five were newly initiated coverage. The top preferred stocks are Cosmax and Siliconto.
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There has never been an earnings announcement with so many mentions of 'first in history.' Cosmax exceeded quarterly sales of 500 billion won for the first time, and Siliconto also broke through 400 billion won in quarterly sales for the first time. Korea Colmar recorded its first quarterly operating profit exceeding 100 trillion won in domestic ODM history, and Cosmecca Korea surpassed 200 billion won in quarterly sales for the first time.
Following these strong Q2 performance announcements, second-half forecasts have been revised upward, making the trend of low start and high finish clear. Combined sales of five major ODM and container companies are projected to increase by 39% year-on-year and 8% compared to the first half. Cosmax, Korea Colmar, and Pemptech Korea all show growth rates exceeding 30%. Compared to the first half, Pemptech Korea and Jenic stand out with high utilization rate increases. This leads to an overall increase in cosmetics exports.
At this pace, cosmetics exports this year are projected to increase by 33% compared to the same period last year. The export increase amount for this year (3.1 billion dollars) is equivalent to the total annual exports of 2016. With Black Friday demand and increased exports to China, the scale could grow even larger. Considering that last year's export growth rate was 10% and the initial forecast for this year was 15%, this is a significant surprise.
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