[Click eStock] "SK Hynix to Show Performance Improvement from Q2"

Hanwha Investment & Securities Report

Hanwha Investment & Securities maintained a buy rating and a target price of 110,000 KRW for SK Hynix on the 20th.

[Image source=Yonhap News]

SK Hynix's expected performance for the first quarter is sales of 4.9 trillion KRW and an operating loss of 3.7 trillion KRW. Sales are expected to decrease by 36% compared to the previous quarter, and operating profit is expected to remain in the red. The memory inventory levels held by major server and mobile customers are understood to be close to normal levels, but the inventory reduction trend has been strongly maintained throughout the quarter, exceeding initial expectations.

Demand is expected to be even weaker compared to the previous quarter. Kim Kwangjin, a researcher at Hanwha Investment & Securities, explained, "Both DRAM and NAND shipments will fall short of the existing guidance," adding, "Prices will also drop sharply, reflecting weakened purchasing sentiment." Both DRAM and NAND are estimated to decline by about 20%.

However, from the second quarter, it is expected to enter a phase of gradual performance improvement. Demand is likely to follow an upward trend due to the low base effect in the first quarter and the mass production shipment effect of new server CPUs. On the supply side, the effects of operating rate adjustments and reductions in capital investment scale are expected to begin appearing in earnest. The operating loss is forecasted to gradually decrease to 3.6 trillion KRW in the second quarter, 2.9 trillion KRW in the third quarter, and 1.5 trillion KRW in the fourth quarter.

The direct trigger for a stock price rebound is inventory reduction. A downward trend reversal in inventory levels is expected to reduce price decline pressure. Researcher Kim Kwangjin said, "This can stimulate purchasing sentiment among customers who are expecting price declines," adding, "Although inventory levels will increase until the first quarter, after confirming the peak at the end of the first quarter, inventory levels will gradually decrease from the second quarter based on gradual recovery and strong supply reduction effects."

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