[Click eStock] "SK Hynix, Full Rebound Expected in Next Year's 3Q... Target Price ↓"

[Asia Economy Reporter Kwon Jae-hee] DB Financial Investment maintained its 'Buy' rating on SK Hynix on the 28th but lowered the target price to 110,000 KRW.

SK Hynix's Q4 earnings are expected to show sales of 8.4 trillion KRW and an operating loss of 1 trillion KRW. Sales are forecasted to decrease by 32.3% year-on-year, and operating profit is expected to turn negative.

This is because the decline in memory prices due to weak IT demand in Q4 is expected to be larger than anticipated, while shipments are judged to be similar to the previous quarter. Additionally, the sharp drop in the KRW-USD exchange rate and NAND inventory asset valuation losses are expected to deepen the decline in profitability beyond expectations.

A full rebound is expected only in the second half of next year. The downward trend in memory prices caused by weak IT demand and customer inventory adjustments is expected to continue through the first half of 2023, with losses persisting for the time being. On the other hand, as memory companies significantly reduce investments and cut production on existing lines, supply is expected to decrease substantially after Q1 2023. The rapid memory price decline so far is expected to increase memory content in new IT products, and with the full-scale launch of new products in Q3 2023, memory shipments are projected to increase. Accordingly, SK Hynix's quarterly earnings are expected to improve significantly from Q3 2023.

DB Investment & Securities analyst Eo Gyu-jin stated, "Due to sluggish market conditions and increased equipment lead times, memory companies' new investments are also limited. In other words, with limited supply growth, the lowered memory prices will trigger shipment increases, and a memory market rebound is expected after Q3 2023."

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