[Click e Stocks] "SK Hynix, Expected Benefits from Intel NAND Acquisition... Target Price Up"

[Image source=Yonhap News]

[Asia Economy Reporter Song Hwajeong] Hanwha Investment & Securities raised the target price for SK Hynix from 140,000 KRW to 180,000 KRW on the 7th, expecting that the effect of Intel's NAND acquisition will be fully reflected and positively impact the company's performance. The investment opinion was maintained as 'Buy.'

Researcher Lee Sunhak of Hanwha Investment & Securities explained, "We have raised SK Hynix's operating profit forecast for this year by 34.6% compared to the previous estimate," adding, "Considering the end of the DRAM price decline and the reflection of Intel NAND's performance consolidation, results close to the record-high operating profit in 2018 are expected."

Last year's fourth-quarter performance is also expected to exceed market expectations. Researcher Lee said, "SK Hynix's fourth-quarter results are expected to show sales of 12.6 trillion KRW and operating profit of 4.1 trillion KRW, exceeding the previous operating profit estimate by 7.8%," adding, "Bit growth (bit shipment growth rate) is expected to be 7% for DRAM and 16% for NAND, meeting expectations, and average selling prices are estimated to be better than expected at -5% for DRAM and -3% for NAND." The average KRW-USD exchange rate in the fourth quarter rose 2% compared to the previous quarter, which also contributed to improved profitability.

Hanwha Investment & Securities forecast SK Hynix's performance this year to be sales of 59.3 trillion KRW and operating profit of 19.2 trillion KRW. PC and server demand, initially expected to weaken, is favorable, and mobile demand, which had been sluggish for two years due to COVID-19, is expected to recover to normal levels. Researcher Lee analyzed, "DRAM prices will stop declining from the second quarter and turn upward in the second half," adding, "NAND prices are also expected to stabilize from the first quarter due to production adjustments at Samsung Electronics' Xi'an plant, and with Intel NAND's performance consolidation, about 1.8 trillion KRW in operating profit will be added annually."

Short-term corrections are seen as buying opportunities. Researcher Lee said, "As initially expected, the memory downcycle is ending quickly, and with suppliers implementing profitability-focused strategies, the possibility of oversupply has decreased," adding, "SK Hynix's capital expenditure this year will increase by 31% compared to last year, but this is due to the operation of the new M16 fab and the rise in unit capital expenditure including extreme ultraviolet (EUV) equipment. We recommend buying during the short-term correction period."

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