[Click eStock] "SK Hynix, 4Q Deficit Expected at 1.1 Trillion Won"

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[Asia Economy Reporter Hwang Yoon-joo] Daol Investment & Securities predicted on the 19th that SK Hynix's operating loss in the fourth quarter would fall short of consensus. Accordingly, the investment opinion was maintained as 'Buy,' but the target price was lowered to 105,000 KRW.

Kim Yang-jae, a researcher at Daol Investment & Securities, stated, "The fourth-quarter sales are expected to be 8 trillion KRW, a 34.7% decrease compared to the previous year, and the operating loss is expected to be 1.1 trillion KRW, falling short of estimates."

Researcher Kim explained, "A large-scale deficit reversal is estimated due to inventory valuation losses," and added, "The stock price direction will be determined depending on whether there is participation in production cuts in Samsung Electronics' fourth-quarter earnings announcement."

Kim said, "Considering the current inventory and price decline trend in the memory industry, Samsung Electronics is likely to start supply adjustment as early as the first quarter of 2023," and evaluated, "In the case of DRAM, where the cost difference with the second and third-ranked companies is not significant, there is no real benefit in a chicken game, and the possibility of competitor exit is also limited in the structure where the governments of the US, Japan, and China support their domestic companies."

The estimated sales for 2023 are expected to decrease by 30.5% year-on-year to 31.3 trillion KRW. An operating loss of 3.8 trillion KRW is estimated, indicating a return to deficit.

Researcher Kim pointed out, "Due to NAND inventory valuation losses and the impact of DRAM turning to a deficit, performance deterioration is inevitable until the first half of 2023," and noted, "Some memory companies have launched discount promotions to reduce inventory, but customers are not making purchases."

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