[Click eStock] "SK Hynix to Have Many Reasons to Smile Next Year, 4Q Is the Right Time to Increase Weight"

DRAM and NAND Both Expected to See Increasing Orders
Recent Rise, but Only 3.7% Up Since Early Year
Just a Quarter of KOSPI's Increase... Foreign Investors Likely to Continue Net Buying Trend

[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] An analysis has emerged suggesting the need to increase the weighting of SK Hynix. This is due to the expectation of improved performance as various demands surge starting next year.

On the 20th, KB Securities maintained a 'Buy' investment opinion and a target price of 110,000 KRW for SK Hynix, emphasizing that the fourth quarter is the right time to increase weighting. This is because various positive factors are expected next year.

First, with Intel's release of a new high-performance central processing unit (CPU) in the first quarter of next year, server replacement demand is expected to be stimulated for the first time in four years since 2017. Accordingly, a shortage of DRAM supply is anticipated in the second half of the year, which is expected to benefit SK Hynix. Additionally, orders from enterprise server original equipment manufacturers (OEMs), which experienced weak demand this year, are expected to turn to an increasing trend in the fourth quarter. This is because from the second quarter of next year, the semiconductor supply-demand improvement is expected to lead to a rise in the average selling prices (ASP) of DRAM and NAND flash.

Foreign investors steadily buying SK Hynix is also analyzed in the same context. KB Securities researcher Dongwon Kim explained, "Foreigners have cumulatively net purchased more than 10 million shares of SK Hynix for 12 consecutive days since the 4th," adding, "Amid expectations that the semiconductor market will bottom out in the fourth quarter, SK Hynix has no valuation burden compared to US (NVIDIA) and Taiwan (TSMC) tech stocks, and with the US fiscal policy expansion expected until the first half of next year, a strong won-dollar exchange rate is inevitable, which likely factors in exchange gains. The net buying trend is expected to continue for the time being."

Low SK Hynix stock price growth rate was also cited as a reason for increasing weighting. Researcher Kim said, "Despite recent price increases, this year's growth rate was only +3.7% compared to the beginning of the year, which is about a quarter of the KOSPI's +17.1% rise this year," and analyzed, "SK Hynix's operating profit in 2021 is estimated to have increased by +76% year-on-year to 8.5 trillion KRW, marking the highest performance in three years since 2018."

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