[Click eStock] "SK Hynix, Intensified Competition in NAND Sector... Target Price Downgraded"

Kiwoom Securities Report

On the 22nd, Kiwoom Securities lowered the target price for SK Hynix from 220,000 won to 210,000 won, reflecting changes in earnings due to intensified competition in the NAND sector. The investment opinion was maintained as 'Buy.' On the 21st, SK Hynix's closing price was 168,800 won.

SK Hynix achieved record-high sales, operating profit, and net profit in the third quarter of 2024, driven by the high-bandwidth memory, HBM effect. The photo was taken on the 25th at SK Hynix headquarters in Icheon, Gyeonggi Province. Photo by Kang Jin-hyung

Park Yu-ak, a researcher at Kiwoom Securities, stated in a report on the day, "We maintain Kiwoom Securities' existing view that the downward adjustment of capital expenditures (CapEx) by DRAM companies, including SK Hynix, will lead to a favorable market condition for general-purpose DRAM and 5th generation HBM (HBM3e) in 2025," adding, "The price per GB of HBM3e is expected to rise more than 20% compared to HBM3, and the price of general-purpose DRAM will rebound from the second quarter of next year, driving earnings growth in SK Hynix's DRAM division."

He continued, "However, the NAND sector is expected to experience a larger-than-anticipated price decline due to intensified competition, which should lower market expectations for earnings."

Researcher Park announced a downward revision of SK Hynix's fourth-quarter sales to 18.4 trillion won and operating profit to 7.4 trillion won. He explained, "This is because the selling prices of general-purpose memory in the fourth quarter are expected to fall short of initial estimates due to intensified competition with Changxin Memory (CXMT), Fujian Jinhua (JHICC), and Kioxia."

He forecasted that first-quarter sales next year will be 15.9 trillion won and operating profit 5.4 trillion won, down from the previous quarter, due to a decrease in shipments and price declines entering the off-season for demand.

He added, "In particular, the NAND sector is expected to see a more severe supply-demand imbalance and price decline than anticipated, leading to a significant drop in operating profit. Although short-term sales and earnings in the first quarter of next year may exceed our expectations, it is advisable to focus more on the rapidly worsening market conditions in NAND than on concerns."