[Click eStock] "SK Hynix, Turnaround Next Year... Target Price Up 18%"

On the 31st, SK Securities maintained its investment opinion of 'Buy' on SK Hynix and raised the target price from the previous 110,000 KRW to 130,000 KRW.

SK Securities forecasted that in the second quarter of this year, DRAM shipment B/G (Bit Growth) would be 28%, and the average selling price (ASP) would be -12%, indicating that prices are at expected levels while shipments are expected to exceed expectations. Inventory accumulation in PCs and the gradual reflection of increased content for new mobile products in the Greater China region at the end of the second quarter are anticipated. They expect the start of shipments of high-capacity DDR5 products based on 1a in the third quarter, a mobile rebound, and a server demand rebound in the fourth quarter.

[Image source=Yonhap News]

In particular, attention is drawn to SK Hynix's strong competitiveness in high-bandwidth memory (HBM) DRAM, where SK Hynix holds the number one market share. HBM is DRAM used for generative AI such as ChatGPT, and industry benefits from AI are becoming a reality. Currently, SK Hynix is the only company capable of supplying HBM3. Considering the high growth potential and limited suppliers due to the high difficulty of TSV, a contract-based business or a high premium can be expected. This will be a factor for valuation expansion.

Han Donghee, a researcher at SK Securities, analyzed, “Based on shipments exceeding expectations in the second quarter, accelerated inventory decline in the second half of the year, and high visibility of reduced inventory valuation losses, the market will focus on a turnaround next year rather than a deficit this year.” He added, “We have adjusted this year’s operating loss from 11.1 trillion KRW to 9.1 trillion KRW, and expect a price rebound in the fourth quarter and a return to profitability in the first quarter of next year.”