[Click eStock] "SK Hynix Beats 2Q Expectations, Brief Pause in H2 Then Up Again"

2Q Operating Profit 1.9 Trillion KRW, Up 205% YoY... Exceeds Expectation of 1.8 Trillion KRW

[Asia Economy Reporter Minwoo Lee] SK Hynix recorded an operating profit more than three times higher than the same period last year in the second quarter of this year, far exceeding market expectations. It is forecasted to continue rising steadily after a temporary adjustment period in the second half of the year.

On the 24th, DB Financial Investment maintained a 'Buy' rating and a target price of 120,000 KRW for SK Hynix. The closing price on the previous day was 82,400 KRW. This is based on the judgment that the market conditions will continue to improve steadily even after the better-than-expected performance in the second quarter.

In the second quarter of this year, SK Hynix recorded sales of 8.607 trillion KRW and an operating profit of 1.947 trillion KRW. Compared to the same period last year, sales increased by 33.4% and operating profit by 205%. This even surpassed the market expectation of an operating profit of 1.8 trillion KRW, which anticipated an improvement in market conditions. DB Financial Investment analyst Kyu-jin Uh explained, "Despite the global set demand decline due to the full-scale spread of COVID-19 in the second quarter, strong demand for servers and improved yield and sales of advanced processes such as 1y nanometer DRAM and 96-layer 3D NAND led DRAM and NAND prices to exceed expectations."

Although intermittent sluggish periods are expected in the second half, an overall upward trend is forecasted. Data center sales increased in the first half, driven by movements to secure reserve inventory due to potential supply disruptions caused by COVID-19. Since these customers have already secured inventory, the increase in DRAM shipments is expected to be limited even with the recovery of mobile demand in the second half. On the other hand, prices that rose sharply in the first half are expected to undergo a temporary adjustment period in the second half due to weak demand, followed by another rise due to strong demand from the 2021 base effect and supply increase restrictions.

Analyst Uh said, "Demand for server DRAM and solid-state drives (SSD), which was strong in the first half, will temporarily slow down in the second half, but the trend toward non-face-to-face IT due to the habituation of untact lifestyles will continue," adding, "Although short-term concerns remain due to the ongoing COVID-19 issue, the mid- to long-term improvement direction of the memory market remains valid."

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