Disclaimer: This article is for informational purposes only and does not constitute financial advice.
📌 Key Research Highlights
- Broker: Yuanta Securities | Investment Rating: Buy
- Target Price: 3,700,000 KRW (~$2,771 USD based on 1335 KRW/USD), raised from 3,300,000 KRW
- Core Thesis: Record-breaking 3Q26 results and an exceptionally strong 4Q26 outlook driven by HBM4 crossover and structural demand diversification in AI infrastructure.
- Visibility: DRAM and High Bandwidth Memory (HBM) volumes are effectively sold out through 2029.
Investment Thesis and Target Price
Yuanta Securities maintains a Buy rating and has raised the Target Price to 3,700,000 KRW (~$2,771 USD) from the previous 3,300,000 KRW. The valuation is derived by applying a Target PBR of 3.5x to the estimated 2027 Adjusted Book Value Per Share (BPS). The analyst highlights a significant upside potential of 149% relative to the current price (as of Oct 28). The upward revision is supported by increased earnings visibility through Long-Term Agreements (LTAs) and an aggressive shareholder return policy, with FY2026 returns estimated at approximately 100 trillion KRW (~$74.9B USD), comprising over 30 trillion KRW (~$22.5B USD) in cash dividends and over 60 trillion KRW (~$44.9B USD) in share buybacks and cancellations.
Earnings Estimates and Financial Preview
3Q26 Performance (Actual):
- Revenue: 104.6 trillion KRW (~$78.3B USD), YoY +327.9%, QoQ +31.9%.
- Operating Profit: 83.3 trillion KRW (~$62.4B USD), YoY +632.1%, QoQ +37.6%, with an Operating Profit Margin (OPM) of 79.7%.
- Net Profit (Controlling Interest): 41.6 trillion KRW (~$31.2B USD), QoQ -55.7%. This missed consensus due to non-operating losses, including FX losses (11.6 trillion KRW / ~$8.7B USD) and valuation losses on investment assets such as Kioxia (22.9 trillion KRW / ~$17.2B USD).
- Segment Trends: DRAM shipments and prices rose QoQ by +10% and +26%, respectively. NAND prices rose +25% despite a slight decrease in shipments.
4Q26 Forecast:
- Revenue: 147.1 trillion KRW (~$110.2B USD), YoY +348.1%, QoQ +40.6%.
- Operating Profit: 118.2 trillion KRW (~$88.5B USD), YoY +516.7%, QoQ +41.9%, with an expected OPM of 80.4%.
- Growth Drivers: Accelerated transition to 1cnm DRAM processes, M15X ramp-up, and a projected 26%+ QoQ increase in DRAM shipments.
Key Semiconductor Drivers and Catalysts
HBM and DRAM Roadmap: A critical catalyst is the expected “crossover” in 4Q26, where High Bandwidth Memory (HBM) 4 is projected to surpass HBM3E in both shipment volume and revenue share. The company is leveraging tech migration to increase supply within a restricted wafer expansion environment, enhancing operating leverage.
Demand Visibility and LTAs: SK Hynix has completed LTAs with 14 customers, including major global CSPs, securing over 50% of total capacity for 2027-2028. Including ongoing negotiations, DRAM and HBM volumes are effectively sold out through 2029. Demand is further bolstered by the diversification of investment entities, moving beyond a few Big Tech firms to include Sovereign AI, On-premise AI, and general enterprise infrastructure.
🔗 Original Source: View the official filing/article here.