[Click eStock] "SK Hynix Completes Multiple Normalization, Eyes Growth Next Year"

On June 27, Hanwha Investment & Securities raised its target price for SK Hynix to 360,000 won, a 24% increase from the previous target, stating, "It is now time to look toward next year's growth." The firm also maintained its buy recommendation.

On this day, Kim Kwangjin, a researcher at Hanwha Investment & Securities, commented, "The recent share price increase marks a normalization of the previously abnormal undervaluation in the company's multiples. From now on, expectations for next year's earnings growth can be reflected in the share price."

For the second quarter, the company projected sales of 20.8 trillion won (an 18% increase quarter-on-quarter) and operating profit of 9 trillion won (a 23% increase quarter-on-quarter). Despite negative foreign exchange effects due to a weaker won, SK Hynix is expected to deliver excellent results that meet the market's high expectations.

Kim cited the full-scale expansion of sales of fifth-generation high-bandwidth memory (HBM3E) 12-layer products as the key factor. "With the ramp-up of supplies related to GB300, the share of 3E 12-layer products in total HBM shipments likely exceeded 50%, a significant increase from about 25% in the first quarter," he explained.

He forecast that operating profit in the second half of the year would rise to 21.4 trillion won (10.5 trillion won in the third quarter and 11 trillion won in the fourth quarter). The ongoing improvement in product mix due to further expansion of HBM3E 12-layer sales is expected to continue, and although SK Hynix's exposure is relatively lower than competitors, strong pricing for conventional DRAM (due to the end of D4 production and D5 production constraints) will also have a positive impact.

Kim added, "This is a period when expectations for next year's HBM market can be reflected in the share price. While competition in the HBM market next year may intensify compared to this year?when SK Hynix has effectively dominated?due to the growing influence of latecomers, the market growth itself is expected to be steep." He also emphasized, "The HBM market is projected to grow from 22.8 billion Gb (gigabits) this year to 35.7 billion Gb next year, and SK Hynix is expected to maintain its leadership position as the leading supplier."