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: 3,200,000 KRW (~$2,397 USD based on 1335 KRW/USD), lowered from 4,000,000 KRW
- Core Thesis: Strong 3Q26 earnings have neutralized negative catalysts; valuation remains attractive despite a target price adjustment to reflect current market price gaps.
- Key Driver: Rapid expansion of 1c nm DRAM and 321L NAND processes, coupled with aggressive shareholder returns totaling 100 trillion KRW (~$74.9B USD) for FY2026.
Investment Thesis and Target Price
IBK Securities maintains a Buy rating on SK Hynix, asserting that the stock is currently undervalued relative to its fundamentals, particularly with the continued growth of the AI server market. The analyst notes that the sharp decline in stock price during 2026 was an overreaction not supported by industry fundamentals.
The Target Price has been lowered to 3,200,000 KRW (~$2,397 USD) from 4,000,000 KRW (~$2,997 USD). This adjustment is not due to concerns over the memory market cycle, but rather to reduce the gap (divergence) with the current market price. The valuation is based on a PER of 6x applied to the 2027 estimated EPS of 538,187 KRW (~$403 USD).
Earnings Estimates and Financial Preview
3Q26 Performance (Actuals/Estimates):
- Revenue: 104.6 trillion KRW (~$78.3B USD), up 31.9% QoQ, exceeding previous forecasts due to higher-than-expected ASP increases in both DRAM and NAND.
- Operating Profit: 83.3 trillion KRW (~$62.4B USD), up 37.6% QoQ.
- Divisional Breakdown:
- DRAM: Revenue increased 35.4% QoQ (Bit Growth +11.5%, ASP +28.2%). Operating profit reached 65.1 trillion KRW (~$48.8B USD) with an operating margin of 83.0%.
- NAND: Revenue increased 18.2% QoQ (Bit Growth -1%, ASP +26%). Operating profit reached 18.2 trillion KRW (~$13.6B USD) with an operating margin of 72.4%.
4Q26 Preview:
- Revenue Forecast: 135.3 trillion KRW (~$101.3B USD), a 29.4% increase QoQ, driven by a 25% increase in volume from new line operations.
- Operating Profit Forecast: 111.7 trillion KRW (~$83.7B USD), consisting of 90.9 trillion KRW (~$68.1B USD) from DRAM and 20.7 trillion KRW (~$15.5B USD) from NAND.
Key Semiconductor Drivers and Catalysts
1. Process Migration and Technology Roadmap:
- DRAM: Rapid expansion of 1c nm process to increase supply under wafer constraints. 1c nm bit share is expected to rise from 3% in 1Q26 to 33% by year-end 2026.
- NAND: Transition to High-End 321L is faster than expected, crossing over with 176L in 2Q26. 321L share is projected to reach 64% by the end of 2026.
- HBM: HBM4 share in 3Q26 was over 30% and is expected to reach 60% by the end of 4Q26. The analyst dismisses quality concerns, noting that 3Q results show no significant negative impact.
2. Market Demand and Product Mix:
- ASP Differentiation: SK Hynix is achieving higher ASP growth (high 20% range) compared to Micron (high 10% range) and Samsung Electronics (low 20% range) due to improved customer mix.
- Agent AI: The proliferation of Agent AI (e.g., Meta’s MUSE) is expected to explosively increase DRAM demand per user.
3. Shareholder Returns:
- The company announced a total shareholder return plan of approximately 100 trillion KRW (~$74.9B USD) for FY2026, including over 30 trillion KRW (~$22.5B USD) in dividends and over 60 trillion KRW (~$44.9B USD) in share buybacks/cancellations.
🔗 Original Source: View the official filing/article here.