[Click eStock] "SK Hynix, Target Price Raised by 14%"

Rising DRAM Prices, Increasing DRAM Demand
KB Securities "SK Hynix Target Price Raised from 140,000 KRW to 160,000 KRW"

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KB Securities has raised the target price for SK Hynix, citing rising DRAM prices and significantly increased demand.

On the 19th, KB Securities maintained its 'Buy' rating on SK Hynix while raising the target price by 14% from 140,000 KRW to 160,000 KRW. The previous closing price was 126,500 KRW.

The expected increase in DRAM prices this year is interpreted as having a positive impact on earnings. The COVID-19 lockdown in Xi'an, China, has led to logistics disruptions and production setbacks for DRAM and NAND. Samsung Electronics has reduced wafer input at its Xi'an plant, and U.S. semiconductor company Micron has cut production staff in its DRAM back-end lines by about half, lowering operating rates.

Dongwon Kim, a researcher at KB Securities, stated, "Production disruptions are likely to lead to inventory replenishment demand from major set customers whose semiconductor inventories are decreasing," adding, "This will positively affect memory price negotiations in the first half of this year." Accordingly, KB Securities revised its estimate for DRAM price decline in Q1 from over 10% to an 8% drop.

DRAM demand is also expected to increase. The memory demand for servers from the four major North American data center companies remains robust. Additionally, PC and mobile demand are predicted to gradually recover. Researcher Kim explained, "There will be proactive server investments for building metaverse platforms," and noted, "DRAM inventory held by server companies has decreased from 8-9 weeks in Q4 last year to 6-7 weeks currently."

Meanwhile, KB Securities estimated SK Hynix's sales to increase by 23% year-on-year to 53.2 trillion KRW, and operating profit to rise by 18% over the same period to 14.1 trillion KRW.