[Click eStock] "SK Hynix, Semiconductor Market in Fog"

[Asia Economy Reporter Ji Yeon-jin] Ebest Investment & Securities announced on the 3rd that it maintains its hold rating and target price of 133,000 KRW for SK Hynix, stating that liquidity tightening due to this year's interest rate hikes will lead to changes in the investment environment for companies.

Nam Dae-jong, a researcher at Ebest Investment & Securities, said, "Currently, SK Hynix's stock price is at 1.1 times the 12-month forward price-to-book ratio (PBR), which is below the historical average," adding, "Although there is high uncertainty regarding demand visibility after the second quarter this year, the stock price is judged to have already reflected a significant portion of this uncertainty. While uncertain variables still exist, the stock price entering below a PBR of 1 can be considered a buying zone."

The company reported first-quarter sales of 12.2 trillion KRW, a 2% decrease from the previous quarter, and operating profit of 2.9 trillion KRW, down 32%, falling short of market expectations. This was due to approximately 380 billion KRW in sales warranty provisions and about 100 billion KRW in one-time costs related to Solidigm. The sales warranty provisions pertain to some DRAM production products from 2020, and the company mentioned that if the same issue arises over the next two years, compensation will be made through negotiations with customers.

Second-quarter performance is expected to show sales of 14.7 trillion KRW, a 21% increase from the previous quarter, and operating profit of 4.1 trillion KRW, up 43%. This is due to an anticipated increase in Bit Growth (the increase in memory supply measured in bits) and a continued weakening of the KRW-USD exchange rate. Researcher Nam said, "Demand visibility is still not high in the second quarter," adding, "Current demand for PCs and mobile devices is slowing, but server demand is expected to offset this; however, liquidity tightening due to interest rate hikes will bring changes to companies' investment environments."