Disclaimer: This article is for informational purposes only and does not constitute financial advice.
📌 Key Research Highlights
- Broker: IBK Securities | Rating: Buy (Maintained)
- Target Price: 4,000,000 KRW (~$2,987 USD based on 1339 KRW/USD)
- Core Thesis: Sustained demand for memory driven by AI model growth, coupled with limited supply, ensures high profitability and stable cash flow.
- Shareholder Return: Aggressive policy to return over 50% of FCF (excluding CAPEX), with a focus on treasury stock buybacks.
Investment Thesis and Target Price
IBK Securities maintains a Buy rating on SK Hynix. The analyst argues that the current stock price is significantly undervalued given the structural demand for memory fueled by the expansion of AI models. With supply growth remaining limited for the foreseeable future, the analyst expects low volatility in DRAM and NAND Flash prices, enabling the company to maintain high profitability and generate stable cash flows.
The Target Price of 4,000,000 KRW (~$2,987 USD based on 1339 KRW/USD) is maintained. This valuation is derived by applying a P/E multiple of 9x to the 12-month forward EPS estimate of 446,092 KRW (~$333 USD).
Earnings Estimates and Financial Preview
For 3Q26, revenue is projected at 95.8 trillion KRW (~$71.5B USD) and operating profit at 75.1 trillion KRW (~$56.1B USD). While these figures are lower than previous forecasts due to the impact of the KRW/USD exchange rate, the operating margin is expected to rise by 2.1%p QoQ to 78.4%.
Divisional Breakdown (3Q26E):
- DRAM: Revenue of 73.1 trillion KRW (~$54.6B USD) and operating profit of 59.2 trillion KRW (~$44.2B USD). DRAM ASPs were revised upward due to price increases in specific products, though the impact on overall profitability is expected to be modest.
- NAND Flash: Revenue of 22.4 trillion KRW (~$16.7B USD) and operating profit of 15.9 trillion KRW (~$11.9B USD).
Long-term Forecasts:
The analyst projects significant growth through 2028, with 2026F annual revenue of 347.9 trillion KRW (~$260B USD) and operating profit of 269.8 trillion KRW (~$201.5B USD), scaling up to 728.7 trillion KRW (~$544B USD) in revenue and 599.1 trillion KRW (~$447.5B USD) in operating profit by 2028F.
Key Semiconductor Drivers and Catalysts
- AI-Driven Demand: The primary catalyst is the continuous increase in memory demand resulting from the growth of AI models, which is outstripping supply.
- Pricing Power: The report notes that the industry remains in a price increase phase, specifically highlighting the upward adjustment of DRAM ASPs.
- Shareholder Return Policy: A new policy announced on August 19, 2026, commits to using over 50% of Free Cash Flow (FCF) minus CAPEX for shareholder returns. For 2026, this is estimated to be at least 90 trillion KRW (~$67.2B USD). Beyond the existing 40 trillion KRW (~$29.9B USD) program, additional treasury stock buybacks are expected in 4Q26.
🔗 Original Source: View the official filing/article here.