[Click eStock] "SK Hynix Target Price Raised to 220,000 Won"

Shinhan Investment Corp. announced on the 27th that it has raised the target price for SK Hynix to 220,000 KRW and maintained a buy rating.

They forecast a performance surprise due to faster-than-expected price increases and strong demand in the first quarter.

The first-quarter revenue and operating profit estimates were raised to 11.7 trillion KRW and 1.7 trillion KRW, respectively.

Operating profit could improve further depending on the reversal of inventory valuation losses. It is expected to significantly exceed the consensus of 1.2 trillion KRW.

Bit growth (B/G, the semiconductor production growth rate converted to bit units) is estimated at -14% for DRAM and +2% for NAND, with average selling prices expected to rise by 17% and 22%, respectively.

The DRAM division is expected to offset seasonal downturn effects with continued product mix improvement driven by strong demand for DDR5 and HBM. While maintaining a profitability-focused strategy rather than shipment volume expansion, operating margin is expected to improve to 28%. The NAND division has confirmed proactive inventory accumulation demand from customers, and the production cut effects continue. With price increases exceeding market expectations, a significant improvement in losses compared to the previous quarter is anticipated.

Hyungtae Kim, Senior Researcher at Shinhan Investment Corp., stated, "We expect a performance trend of low in the first half and high in the second half due to the recovery of seasonality in the downstream industry, and the production capacity constraints effect from conversion investments and increased HBM proportion will continue."

Researcher Kim added, "Shipment growth is judged to be in a short-term stagnation phase, but the memory market is expected to reach a supply-demand balance in the first half, and with the recovery of set demand, the possibility of supply shortages is increasing from the second half."

He projected that the average selling price increase rates for DRAM and NAND in 2024 will reach 58% and 68%, respectively.