Disclaimer: This article is for informational purposes only and does not constitute financial advice.
📌 Key Research Highlights
- Broker: SK Securities | Rating: Buy (Maintained)
- Target Price: 4,000,000 KRW (~$2,997 USD based on 1335 KRW/USD)
- Core Thesis: Exceptional 3Q26 earnings beat driven by HBM4 shipments and memory shortages; outlook remains bullish with 4Q26 operating profit expected to exceed 100 trillion KRW.
- Key Catalyst: HBM4 cross-over, 1c DRAM acceleration, and M15X ramp-up.
Investment Thesis and Target Price
SK Securities maintains a Buy rating and a Target Price of 4,000,000 KRW (~$2,997 USD based on 1335 KRW/USD). The analyst views the current stock price as significantly undervalued, trading at a 12-month forward P/E of approximately 3.4x. This valuation is considered an extreme discount given the extended duration of the earnings cycle and the company’s strong commitment to shareholder returns, including a plan for 100 trillion KRW (~$74.9B USD) in returns, representing 66% of estimated 2026 Free Cash Flow (FCF).
Earnings Estimates and Financial Preview
3Q26 Performance (Actual/Estimated):
- Operating Profit: 83 trillion KRW (~$62.2B USD), exceeding market expectations (+38% QoQ).
- Drivers: Memory price increases driven by severe supply shortages and the start of HBM4 reflections offset the impact of falling exchange rates.
- Divisional Metrics: DRAM shipments +10% and prices +28% (OP Margin 82%); NAND shipments -1% and prices +24% (OP Margin 72%). HBM ASPs rose by approximately 37% with the start of HBM4 shipments.
4Q26 and 2027 Forecasts:
- 4Q26 Operating Profit: Projected at 105 trillion KRW (~$78.6B USD, +27% QoQ), entering the “100 trillion KRW per quarter” era.
- 2027 Operating Profit: Upwardly revised by 12% to 488 trillion KRW (~$365.5B USD, +70% YoY). This revision occurs despite lowering the KRW/USD exchange rate forecast from 1,340 to 1,315.
- 2027 Revenue Estimate: 595.0 trillion KRW (~$445.7B USD).
Key Semiconductor Drivers and Catalysts
The report identifies several critical technological and market catalysts that will sustain growth through 2030:
- HBM Leadership: The transition to HBM4 (Cross-over) and yield stabilization are expected to drive both pricing and profitability. Demand for HBM is currently more than double the available supply.
- Product Roadmap: Acceleration of 1c DRAM shipments and the full-scale ramp-up of the M15X facility in 4Q26 will drive shipment volumes beyond previous expectations.
- Long-Term Agreements (LTA): Discussions are underway to extend LTAs beyond the current 5-year term. HBM and DRAM are effectively sold out through 2029, providing unprecedented earnings visibility.
- Market Dynamics: A structural shift in memory demand and strong AI infrastructure investment are expected to maintain a demand-dominant phase until 2030.
🔗 Original Source: View the official filing/article here.