[Click eStock] SK Hynix, Expecting Supply and Demand Improvement in the First Half of the Year

[Asia Economy Reporter Lee Seon-ae] KB Securities announced on the 3rd that it maintains a 12-month target price of 160,000 KRW and a buy rating for SK Hynix. This is because global memory companies, including SK Hynix, are expected to shift from a supply-centered to a profitability-focused strategy starting from the first quarter of this year, with memory prices and supply-demand conditions bottoming out in the first half of 2022.

Dongwon Kim, a researcher at KB Securities, explained, "For server memory (DRAM, eSSD), the demand for memory inventory accumulation is increasing among the four major North American data center companies, and PC manufacturers are increasing memory orders due to increased set production as the parts supply shortage eases." He added, "However, SK Hynix is expected to adopt an inventory accumulation strategy rather than aggressive DRAM shipments in the first quarter of 2022, with DRAM bit growth projected at -8% and ASP at -7%."

SK Hynix's fourth-quarter performance met consensus with sales of 12.4 trillion KRW (+4.8% QoQ, +55.4% YoY) and operating profit of 4.2 trillion KRW (+1.1% QoQ, +337% YoY, operating margin 34.1%). The first quarter is expected to record sales of 11.4 trillion KRW (-7.6% QoQ, +34.6% YoY) and operating profit of 3.1 trillion KRW (-27.4% QoQ, +131% YoY, operating margin 26.8%), indicating that the first quarter will form the bottom of quarterly performance.

Currently, the memory demand intensity by product for the first quarter is judged to be Server > PC > mobile, and the memory inventory levels of customers are estimated to be mobile > Server > PC. The memory market this year is expected to see gradual supply-demand improvement toward the second half due to the easing of parts supply shortages. In particular, high-spec server demand is expected to increase with the expansion of DDR5 adoption in the second half, with server DRAM and eSSD shipments expected to grow by about 30%.

Researcher Kim emphasized, "SK Hynix's performance improvement in 2022 (52.4 trillion KRW +22% YoY, operating profit 14.5 trillion KRW +28% YoY) is expected, and a new shareholder return policy (DPS 1,200 KRW + FCF 5% from 2022 to 2024) has been announced, raising expectations for a positive stock price trend going forward."

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