Disclaimer: This article is for informational purposes only and does not constitute financial advice.
📌 Key Research Highlights
- Broker: Shinhan Securities | Rating: Buy (Maintained)
- Target Price: 3,000,000 KRW (~$2,249 USD based on 1335 KRW/USD) – Raised by 11%
- Core Thesis: Flawless 3Q26 results with operating margins hitting 80%. DRAM and High Bandwidth Memory (HBM) are effectively sold out through 2029, with long-term agreements (LTAs) providing significant structural stability.
- Key Catalyst: Transition to HBM4 as the mainstream product in 4Q26 and diversification of AI investment entities (Sovereign AI, On-premise).
Investment Thesis and Target Price
Shinhan Securities maintains a Buy rating and has raised the Target Price to 3,000,000 KRW (~$2,249 USD), representing an 11% increase. The valuation is based on a Target PBR of 3.5x, which is the average for DRAM peers, applied to a 12-month forward Book Value Per Share (BPS) of 871,503 KRW (~$653 USD). The analyst notes that the current stock price (1,487,000 KRW / ~$1,114 USD) trades at a 12MF PBR of 1.7x, making it the most undervalued among its DRAM peers. Downside risk is further mitigated by the company’s consistent shareholder return policies.
Earnings Estimates and Financial Preview
3Q26 Review: SK Hynix delivered an “earnings surprise,” exceeding consensus.
- Revenue: 104.6 trillion KRW (~$78.3B USD), up 31.9% QoQ.
- Operating Profit: 83.3 trillion KRW (~$62.4B USD), up 37.6% QoQ, achieving an operating margin of 79.7%.
- ASP Trends: DRAM and NAND Flash Average Selling Prices (ASPs) rose by 29% and 26%, respectively.
4Q26 Preview:
- Revenue Forecast: 126.1 trillion KRW (~$94.4B USD), +20.5% QoQ.
- Operating Profit Forecast: 101.5 trillion KRW (~$76.0B USD), +21.8% QoQ.
- Drivers: Increased shipments of 1c DRAM and HBM4, and a higher mix of high-capacity eSSD (approx. 80%). ASPs for both DRAM and NAND are expected to rise by around 10%.
Long-term Estimates:
- 2026F Revenue: 362.6 trillion KRW (~$271.6B USD) | Operating Profit: 283.0 trillion KRW (~$211.9B USD)
- 2027F Revenue: 570.4 trillion KRW (~$427.2B USD) | Operating Profit: 459.1 trillion KRW (~$343.8B USD)
Key Semiconductor Drivers and Catalysts
1. HBM Roadmap and Market Dominance:
Shipments and revenue share of HBM4 are expected to surpass HBM3E in 4Q26. The company reports industry-leading yields for HBM4 Fab and Backend processes. HBM4E samples were completed in 2Q26, and Custom HBM projects are underway with major clients. Despite some customers adjusting stack heights (12-layer to 8-layer) to increase accelerator production, demand remains more than double the available supply.
2. Demand Visibility and LTA:
SK Hynix has secured Long-Term Agreements (LTAs) with 14 major customers, covering over 50% of total capacity for 2027-2028. Combined with ongoing negotiations, DRAM and High Bandwidth Memory (HBM) volumes are effectively sold out through 2029.
3. AI Investment Diversification:
The analyst expects a shift from reliance on a few Big Tech firms to a broader base of AI investors, including Sovereign AI and On-premise deployments. This diversification reduces the impact of investment adjustments by any single entity and supports a sustained memory shortage.
🔗 Original Source: View the official filing/article here.