[Click eStock] "SK Hynix, Absolutely Undervalued Zone... Target Price Maintained"

On the 12th, KB Securities stated about SK Hynix, "The stock price has fallen 27% over the past month, recording a price-to-earnings ratio (PER) of 4.6 times and a price-to-book ratio (PBR) of 1.3 times for next year. Considering the absolute undervaluation phase and the upside risk of the stock price (the risk of not benefiting despite the stock price rising), it is time to consider this," maintaining a target price of 280,000 KRW and a buy rating.

On the same day, Dongwon Kim, a researcher at KB Securities, explained, "Next year, SK Hynix is expected to maintain its position as the number one company in high-bandwidth memory (HBM), with market dominance expanding in HBM3E (5th generation) and HBM4 (6th generation). Estimated operating profit for the next two years is 61.5 trillion KRW, with record-breaking annual profits expected," he said.

SK Hynix's operating profit for the third quarter is expected to reach 7 trillion KRW (operating margin 40%), marking the highest performance in six years since the third quarter of 2018 (6.5 trillion KRW). Researcher Kim said, "The operating profit for DRAM in the third quarter is expected to be 6.2 trillion KRW (operating margin 50%), and NAND's operating profit is estimated at 830 billion KRW (operating margin 17%). Especially, the operating profit for the fourth quarter is expected to be 9 trillion KRW (operating margin 43%), making the operating profit for the second half of this year 16 trillion KRW, the highest in six years since the second half of 2018's 10.9 trillion KRW," he added.

SK Hynix's stock price fell 45% from its peak in July due to concerns over an AI bubble caused by poor profitability relative to AI investments. However, AI investments by major U.S. big tech companies are expected to increase significantly in the future. Researcher Kim noted, "This year and next year are just before the AI trend transition, and big tech companies are taking the risk of building necessary capabilities preemptively through excessive investment in AI data centers, which is much better than losing leadership in the AI market due to underinvestment that threatens survival."

He added, "Especially with the expansion of the AI market, the memory industry is transforming into a customized industry according to customer demands such as HBM. The possibility of oversupply due to increased capital expenditure is expected to be limited. Therefore, the current stock price, which is at the center of AI investment expansion, is judged to be an appropriate time to increase weighting," he concluded.

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