Disclaimer: This article is for informational purposes only and does not constitute financial advice.
Investment Thesis and Target Price
Hyundai Motor Securities maintains a Buy investment rating for SK Hynix with a 6-month Target Price of 3,300,000 KRW (~$2,331 USD based on 1416 KRW/USD). This valuation is derived from the arithmetic mean of applying a P/B multiple of 3x to the average BPS of 2026 and 2027, and a P/E multiple of 10x to the 2027 EPS. The analyst notes that while a slowdown in the pace of ASP increases for Cloud Service Providers (CSPs) may act as a short-term momentum dampener, the historical pattern of price drops following a slowdown is unlikely to repeat. Furthermore, long-term contracts are being signed at levels higher than current prices with strengthened fulfillment clauses, providing high earnings visibility.
Earnings Estimates and Financial Preview
For 2Q26, revenue and operating profit are projected at 87.6 trillion KRW (~$62.5B USD) and 62.4 trillion KRW (~$44.1B USD) respectively, which are 3.1% and 1.6% lower than previous forecasts due to DRAM Bit Growth falling below expectations. The report suggests market consensus may not fully reflect performance bonus provisions implemented since 1Q26. Looking ahead, the company’s annual forecasts are as follows:
- 2026F: Revenue of 365.1 trillion KRW (~$257.8B USD) and Operating Profit of 260.9 trillion KRW (~$184.2B USD).
- 2027F: Revenue of 571.1 trillion KRW (~$403.3B USD) and Operating Profit of 380.3 trillion KRW (~$268.5B USD).
- 2028F: Revenue of 780.0 trillion KRW (~$550.8B USD) and Operating Profit of 439.1 trillion KRW (~$310.1B USD).
Downside rigidity is expected to be maintained below 2 million KRW (~$1,412 USD), which corresponds to a P/B of 2x based on 2027 estimates, given the rapid increase in retained earnings over the next three years.
Key Semiconductor Drivers and Outlook
The current AI Cycle differs fundamentally from the 2017-2018 Cloud Cycle; whereas the previous cycle relied on direct contracts with CSPs, the AI Cycle involves supplying High Bandwidth Memory (HBM) and SOCAMM through partners like NVIDIA. This reduced direct exposure to CSPs is viewed positively. The analyst emphasizes that the increase in customized product proportions (HBM/SOCAMM) and Long-Term Agreements (LTAs) with CSPs will alleviate market concerns regarding price volatility. The core strategy for future growth will be increasing the proportion of Premium products—including HBM4, HBM4e, LPDDR6, 3DS DIMM, and PCIe Gen7—to drive an increase in the Blended ASP.
🔗 Original Source: View the official filing/article here.