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Analyst Research · Translated Summary
Disclaimer: This article is for informational purposes only and does not constitute financial advice.
📌 Key Research Highlights
- Broker: Kyobo Securities
- Investment Rating: Buy (Maintained)
- Target Price: 4,000,000 KRW (~$2,997 USD based on 1335 KRW/USD)
- Core Thesis: Record-breaking 3Q26 results driven by HBM4 shipments and DRAM ASP increases, with a long-term super-cycle supported by AI investment diversification and strengthened pricing power.
Investment Thesis and Target Price
Kyobo Securities maintains a Buy rating and a Target Price of 4,000,000 KRW (~$2,997 USD based on 1335 KRW/USD). The valuation is supported by three primary pillars:
- Prolonged Memory Super-Cycle: High visibility of demand through 2029, driven by the expansion of High Bandwidth Memory (HBM) 4 supply and rising general-purpose DRAM prices.
- Shift to Supplier-Dominant Market: Increased pricing power through the expansion of Long-Term Agreements (LTAs) and controlled capacity expansion, which is expected to reduce historical earnings volatility.
- Valuation Re-rating via Shareholder Returns: Massive Free Cash Flow (FCF) generation is expected to lead to increased dividends and share buybacks/cancellations, reducing the “cycle discount” typically applied to the memory industry.
Earnings Estimates and Financial Preview
3Q26 Performance (Actual/Estimated):
SK Hynix achieved record-breaking results in 3Q26, exceeding market consensus:
- Revenue: 104.6 trillion KRW (~$78.3B USD), up 328% YoY and 32% QoQ.
- Operating Profit: 83.3 trillion KRW (~$62.4B USD), up 632% YoY and 38% QoQ.
- Operating Margin: 79.7% (up 3.4%p QoQ).
- Divisional Performance: DRAM and NAND Flash operating margins are estimated at 82.4% and 73.0%, respectively. DRAM shipments (B/G) increased 12% QoQ with ASPs rising 28% QoQ; NAND B/G decreased 1% QoQ while ASPs rose 27% QoQ.
4Q26 and Long-term Forecast:
For 4Q26, the company is projected to surpass 100 trillion KRW in quarterly operating profit:
- 4Q26 Revenue Forecast: 126.2 trillion KRW (~$94.5B USD), up 285% YoY and 21% QoQ.
- 4Q26 Operating Profit Forecast: 101.1 trillion KRW (~$75.7B USD), up 427% YoY and 21% QoQ.
- Annual Operating Profit Estimates: 2026E: 282.6 trillion KRW (~$211.7B USD), 2027E: 462.5 trillion KRW (~$346.5B USD), and 2028E: 533.0 trillion KRW (~$399.2B USD).
Key Semiconductor Drivers and Catalysts
The report identifies several critical catalysts driving the current growth trajectory:
- HBM4 Roadmap: The full-scale shipment and expanding revenue contribution of HBM4 are primary drivers of profitability.
- Capacity and Yield: The early expansion of M15X operations and yield improvements in 1cnm DRAM are expected to increase shipment volumes in 4Q26.
- Market Demand: Strong demand for server DRAM and price increases in general-purpose DRAM are providing a robust foundation for earnings growth.
- Strategic Positioning: The transition to a structure where the company can defend both price and profitability by adjusting expansion speeds based on high demand visibility.
🔗 Original Source: View the official filing/article here.