'SK Hynix to Reach 200,000 Won'... Rising Expectations for the HBM Leader

Brokerage Firms Raise Target Prices... Up to 200,000 Won Range
'Factors for Increase' HBM Market Dominance and Earnings Improvement Expectations

The market's expectations for SK Hynix, which has been continuously reaching new highs and maintaining a strong upward trend, are rising even further. The target stock price has also been raised to the 200,000 KRW range. Although the stock price has increased significantly since last year, considering its dominance in the high-bandwidth memory (HBM) market, there is a forecast that there is ample room for further growth.

According to financial information provider FnGuide on the 13th, seven securities firms have raised their target prices for SK Hynix since late last month. As a result, SK Hynix’s target stock price has increased from the 150,000?170,000 KRW range to the 180,000?210,000 KRW range.

KB Securities raised SK Hynix’s target price by 17% from 180,000 KRW to 210,000 KRW yesterday. Dongwon Kim, a researcher at KB Securities, said, "The target price increase is due to raising this year’s operating profit estimate by 17% to 12.2 trillion KRW compared to the previous forecast." He added, "In 2024, the proportion of HBM sales in DRAM is expected to double compared to the previous year, with HBM accounting for more than one-fifth of total DRAM sales, leading to improved profitability. For NAND, the continued production cuts will reduce supply, and the average selling price (ASP) is expected to rise, resulting in a reduction of losses by 8 trillion KRW compared to last year."

BNK Investment & Securities raised SK Hynix’s target price from 155,000 KRW to 210,000 KRW. Minhee Lee, a researcher at BNK Investment & Securities, said, "We are raising the target price considering the upward revision of earnings reflecting higher-than-expected ASP increases and the recent re-rating trend. Given the AI server investment boom and the key role of Nvidia, TSMC, and SK Hynix in the supply chain, the recent stock price re-rating is justified."

Mirae Asset Securities also raised SK Hynix’s target price to the 200,000 KRW range, from 173,000 KRW to 200,000 KRW. Younggeon Kim, a researcher at Mirae Asset Securities, explained, "Due to the rapid expansion of HBM demand and the significant cannibalization effect on double data rate (DDR) wafer production capacity, along with an expected improvement in conventional memory demand, we are raising SK Hynix’s earnings estimates and corresponding target price."

The maintenance of HBM’s market dominance and the resulting expectations for earnings improvement are cited as reasons for the target price increase. Significant earnings improvement is expected starting from the first quarter of this year. Researcher Kim said, "SK Hynix’s first-quarter earnings are expected to show a substantial improvement with sales of 11.7 trillion KRW and operating profit of 1.1 trillion KRW. The DRAM operating profit for the first quarter is expected to be 1.8 trillion KRW due to strategic supply cuts aimed at improving profitability and price increases. Despite a decrease in NAND shipments, the price increase effect and reduction in low-priced product proportions are expected to reduce operating losses by more than 1 trillion KRW compared to the previous quarter."

He added, "The strong growth trend in earnings driven by a product mix of high-capacity server DRAM and HBM products will continue. First-quarter sales are expected to reach 12.4 trillion KRW with operating profit of 1.74 trillion KRW, and notably, the DRAM operating margin is expected to widen its gap with competitors for three consecutive quarters."

Although there is some pressure from the recent short-term stock price rise, opinions suggest that there is still sufficient room for further growth. SK Hynix’s stock price has steadily risen from the 140,000 KRW range at the beginning of this year and recently surpassed 170,000 KRW. However, it appears to be taking a breather due to short-term price rise pressure and Nvidia’s stock weakness. Researcher Kim said, "Despite new competitors entering the market from HBM3E, Nvidia’s dominance in the HBM market is expected to be maintained for the time being. SK Hynix’s stock price has risen 129% compared to early 2023, but there is still ample room for further growth."

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