[Click eStock] "SK Hynix Lowers Profit Estimates... Target Price Down to 250,000 Won"

On the 12th, Korea Investment & Securities announced that it has lowered the target price for SK Hynix to 250,000 KRW, reflecting a downward revision in earnings estimates. The investment rating was maintained at 'Buy,' and the stock was selected as the sector's 'Top Pick.'

Researcher Cha Min-sook stated, "The third-quarter earnings are expected to show sales of 17.8 trillion KRW and operating profit of 6.9 trillion KRW, which is 2% below the operating profit consensus of 7.1 trillion KRW." Nevertheless, the operating profit is estimated to exceed the record high of 6.5 trillion KRW posted in the third quarter of 2018.

Cha added, "Despite inventory adjustment issues with mobile clients, the proportion of high-end products such as HBM and high-capacity DDR5 for servers will increase, leading to more than a 10% rise in the average selling price (ASP) of DRAM compared to the previous quarter." She also noted, "For NAND, sales of mobile-oriented UFS and PC SSD, which have weak demand, will be reduced, focusing instead on enterprise SSDs, enabling defense of ASP and operating profit margins." HBM is estimated to account for 24% of DRAM sales.

She explained, "Reflecting the downward revision in earnings estimates, the target price has been lowered by 14% to 250,000 KRW, but considering the excessive price correction, the 'Buy' rating is maintained and the stock is recommended as the top pick within the sector."

She continued, "The market is concerned about a decline in DRAM ASP in the fourth quarter, but inventory outside of mobile clients remains healthy, and DDR5 and HBM are still in short supply." She pointed out, "Due to continued production cuts in 2024, supply expansion will be limited in 2025 as well, and the increase in HBM also acts as a factor restricting overall DRAM supply."

She further stated, "Once the short-term mobile inventory adjustment is completed, supply and demand will balance, leading to a prolonged period of stable ASP and earnings." She concluded, "We recommend buying as the price is expected to have the greatest rise and momentum during the rebound after the adjustment."

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