[Click eStock] "SK Hynix, Uncertainty Due to Novel Coronavirus... No Problem with Direction"

[Asia Economy Reporter Eunmo Koo] DB Financial Investment has assessed that despite the recent expansion of the novel coronavirus (COVID-19) causing uncertainty in the memory market, there is no issue with the overall direction for SK Hynix. The investment rating and target price were maintained at ‘Buy’ and 115,000 KRW, respectively.

On the 3rd, DB Financial Investment analyst Gyujin Uh reported that SK Hynix’s Q4 sales last year decreased by 30.3% year-on-year to 6.9 trillion KRW, and operating profit fell by 94.7% to 236 billion KRW, missing market expectations (operating profit of 460 billion KRW). Analyst Uh explained, “Although DRAM shipments and prices exceeded expectations due to a rebound in the memory market, profitability fell short of expectations due to price declines in some NAND products and costs incurred from early yield issues in advanced processes such as mid-10 nanometer (1y nm) and 96-layer 3D NAND.”

Despite the uncertainty in the memory market, which is experiencing a full-fledged rebound amid the global economic uncertainty caused by the recent COVID-19 situation, the overall direction remains intact. Analyst Uh stated, “It is true that concerns are high for SK Hynix, which has a relatively large sales proportion in China, but the memory market is at the stage of a structural rebound, with supply and demand improving due to increased demand from data centers, 5G, artificial intelligence (AI), and continued supply restrictions,” adding, “Even if the timing of the rebound is somewhat delayed due to short-term issues, the overall framework does not change.”

The investment rating and target price were maintained at ‘Buy’ and 115,000 KRW, respectively. The memory market rebound is beginning due to the recent recovery in demand from data centers. Global cloud companies such as Amazon, Microsoft, and Google have resumed orders for server DRAM and solid-state drives (SSD), and contract prices have already risen. Analyst Uh evaluated, “Mobile DRAM demand is also expected to recover following new smartphone launches (especially 5G) from the second quarter onward,” and added, “The profitability-focused investment strategy of memory companies remains valid.”

This content was produced with the assistance of AI translation services.