[Click eStock] "SK Hynix, HBM Market Dominance Expected to Continue... Target Price Up"

Target Price Raised by 17% Compared to Previous Level

On the 12th, KB Securities raised the target price for SK Hynix from 180,000 KRW to 210,000 KRW, citing the continued dominance in the high-bandwidth memory (HBM) market. The investment rating was maintained as 'Buy.'

Dongwon Kim, a researcher at KB Securities, explained, "The target price increase is due to an upward revision of this year's operating profit to 12.2 trillion KRW, a 17% increase from the previous estimate. In 2024, the proportion of HBM in DRAM sales is expected to double compared to the previous year, with HBM accounting for more than one-fifth of total DRAM sales, driving profitability improvements. For NAND, ongoing production cuts will reduce supply, and the average selling price (ASP) increase is expected to reduce losses by 8 trillion KRW compared to the previous year."

SK Hynix's first-quarter performance is expected to show significant improvement, with sales of 11.7 trillion KRW and operating profit of 1.1 trillion KRW. Kim said, "First-quarter DRAM operating profit is expected to be 1.8 trillion KRW due to price increases amid strategic supply reductions aimed at improving profitability. Despite a decrease in NAND shipments, the price increase effect and reduction in low-priced product share are estimated to reduce operating losses by more than 1 trillion KRW compared to the previous quarter."

With SK Hynix's sustained dominance in the HBM market, there is ample room for further stock price appreciation. Kim stated, "Despite new competitors entering from HBM3E, Nvidia's dominance in the HBM market is expected to continue for the time being. From the perspective of Nvidia's graphics processing unit (GPU) product competitiveness, there are no substitutes, allowing it to maintain a market share above 80% this year. SK Hynix's HBM3E line, applying 1b nm technology, is expected to improve productivity. Between 2024 and 2026, the AI market will see a rapid increase in AI penetration across all industries, with a surge in artificial general intelligence (AGI) computations and the necessity to build AI-dedicated data centers capable of handling astronomical AI computations," he explained. He added, "Although SK Hynix's stock price has risen 129% since early 2023, there is still sufficient room for further gains."

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