[Click eStock] "SK Hynix's Acquisition of Intel NAND Division, Opportunity for Target Price Upgrade"

Hana Financial Investment Raises Target Price to 163,000 Won

SK Hynix Headquarters in Icheon, Gyeonggi Province. [Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] SK Hynix has obtained approval from Chinese antitrust authorities, considered the most challenging hurdle in acquiring Intel's NAND flash business in the United States. As NAND-related performance increases, this is seen as an opportunity for SK Hynix's corporate valuation and stock price to rise to the next level.

On the 23rd, Hana Financial Investment maintained its 'Buy' rating on SK Hynix and raised the target price to 163,000 KRW, citing this background. The closing price the previous day was 127,000 KRW.

The day before, SK Hynix announced that it had received approval from the State Administration for Market Regulation (SAMR) of China regarding the acquisition of Intel's NAND business division. This completes the approval process from antitrust authorities in eight countries required for the acquisition.

Accordingly, it is expected that the performance of Intel's NAND business in the U.S. will be added starting next year. Intel's NAND business revenue was 5.1 trillion KRW in 2019 and about 6.3 trillion KRW last year. Excluding the Optane business, which was not part of the acquisition, the estimated revenue is around 5 to 6 trillion KRW. Hana Financial Investment reflected this and estimated SK Hynix's revenue for next year at 53.3437 trillion KRW. This is more than 5 trillion KRW higher than the market consensus, which is still around 48 trillion KRW.

Researcher Kyungmin Kim of Hana Financial Investment explained, "Because the product price indicators in the NAND sector are more volatile and harder to predict compared to DRAM, we cannot be 100% certain that this revenue estimate is accurate, but considering the high likelihood that it will be reflected in consolidated revenue, next year's revenue is expected to exceed 53 trillion KRW."

Operating profit for next year was estimated somewhat conservatively at 13.355 trillion KRW, taking into account initial costs arising from the merger and acquisition process. Operating profit from the NAND division is expected to be around 404.3 billion KRW. Ultimately, most of the operating profit is expected to come from the DRAM business.

Researcher Kim said, "The combination of SK Hynix and Intel's NAND business is additionally positive for the price-to-book ratio (PBR) valuation," and forecasted, "SK Hynix's market capitalization could reach 119 trillion KRW."

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