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 (~$2,314 USD based on 1426 KRW/USD). This valuation is derived from the arithmetic mean of applying a 3x P/B multiple to the average BPS of 2026 and 2027, and a 10x P/E multiple to the 2027 EPS. The analyst notes that while a slowdown in ASP growth for Cloud Service Providers (CSPs) may act as a short-term momentum dampener, the historical pattern of price drops following a growth slowdown is unlikely to repeat. Furthermore, long-term agreements (LTAs) are being signed at levels higher than current prices with strengthened execution clauses, providing high earnings visibility.
Earnings Estimates and Financial Preview
For 2Q26, revenue and operating profit are projected at 87.6 trillion KRW (~$61.4B USD) and 62.4 trillion KRW (~$43.8B 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 (~$256.1B USD) and Operating Profit of 260.9 trillion KRW (~$183.0B USD).
- 2027F: Revenue of 571.1 trillion KRW (~$400.4B USD) and Operating Profit of 380.3 trillion KRW (~$266.7B USD).
- 2028F: Revenue of 780.0 trillion KRW (~$547.0B USD) and Operating Profit of 439.1 trillion KRW (~$307.9B USD).
Downside rigidity is expected to be maintained below 2 million KRW (~$1,403 USD), which represents a P/B of approximately 2x based on 2027 estimates, given the rapid increase in retained earnings over the next three years.
Key Semiconductor Drivers and Outlook
The analyst highlights a fundamental difference between the 2017-2018 Cloud Cycle and the current AI Cycle. While the previous cycle relied on direct contracts between memory makers and CSPs, the AI Cycle utilizes intermediaries like NVIDIA for High Bandwidth Memory (HBM) and SOCAMM, reducing direct CSP exposure. Key growth drivers include:
- Premium Product Mix: Focus on increasing the proportion of premium products such as HBM4, HBM4e, LPDDR6, 3DS DIMM, and PCIe Gen7 to drive Blended ASP increases.
- Customized Products: The rise of customized products (HBM/SOCAMM) and increased LTAs with CSPs are expected to alleviate market concerns regarding memory price volatility.
- Market Segmentation: B2C customers are expected to contract based on market price changes, unlike CSPs who are increasingly seeking 5-year long-term contracts.
🔗 Original Source: View the official filing/article here.