Market: KOSPI (000660)
Brokerage : Shinhan Securities
Analyst : Hyungtae Kim (Hyesu Song)
Investment Rating : BUY (Maintain)
Target Price : KRW 2,700,000 (Lowered)
Core Momentum : Ultra-low DRAM and NAND inventories are expected to sustain memory supply shortages through 2027, while stronger server DRAM and high-capacity eSSD demand supports renewed pricing momentum and a Q3 earnings rebound.
📊 1. [Valuation & Key Financial Metrics]
- Stock Performance & Investment Rating
- Investment Rating: BUY (Maintain)
- Target Price: KRW 2,700,000 (Lowered, applying 12MF P/B of 3.3x reflecting conservative price outlook)
- Current Price (As of July 29): KRW 1,401,000
- Upside Potential: 92.7%
- Valuation Multiples
- Annual P/E Trend: 2024 6.4x → 2025 11.0x → 2026F 4.1x → 2027F 2.8x → 2028F 2.6x
- Annual P/B Trend: 2024 1.7x → 2025 3.9x → 2026F 2.5x → 2027F 1.4x → 2028F 0.9x
- Annual EV/EBITDA Trend: 2024 3.9x → 2025 7.7x → 2026F 3.2x → 2027F 1.5x → 2028F 0.9x
- Key Financial Forecasts
- 2024: Revenue KRW 66.19T, Operating Profit KRW 23.47T, Net Profit KRW 19.79T, ROE 31.1%, Dividend Yield 1.3%
- 2025: Revenue KRW 97.15T, Operating Profit KRW 47.21T, Net Profit KRW 42.92T, ROE 44.2%, Dividend Yield 0.5%
- 2026F: Revenue KRW 342.74T, Operating Profit KRW 261.81T, Net Profit KRW 245.34T, ROE 93.2%, Dividend Yield 0.3%
- 2027F: Revenue KRW 536.95T, Operating Profit KRW 422.46T, Net Profit KRW 363.46T, ROE 62.8%, Dividend Yield 1.9%
- 2028F: Revenue KRW 598.56T, Operating Profit KRW 458.87T, Net Profit KRW 395.70T, ROE 42.2%, Dividend Yield 2.4%
🚀 2. [Market Opportunities & Business Outlook]
- Memory Inventory Status & Industry Environment
- As of the end of Q2, inventory levels for both DRAM and NAND stand at merely around 3 weeks, and are projected to further contract to an average of ~2.5 weeks in the second half.
- The supply shortage environment remains intact through 2027; while stock recovery speed may be somewhat delayed due to worsening supply-demand conditions, a resumption of stock price movement synchronized with earnings direction is anticipated.
- 2Q26 Review & 3Q26 Preview
- 2Q26 revenue reached KRW 79.3T (+51% QoQ) and operating profit recorded KRW 60.5T (+61% QoQ), missing consensus estimates (revenue KRW 83.9T, operating profit KRW 64.7T). High HBM sales portions and contract timing differences with major clients partially capped the upper bound of Blended ASP.
- 3Q26 revenue is projected at KRW 99.8T (+26%) and operating profit at KRW 77.2T (+28%). Server-facing high-value DRAM applications and expanding proportions of high-capacity eSSDs are expected to drive price increases in the second half.
- LTAs (Long-Term Agreements) & HBM4 Competitiveness
- LTAs are structured in various forms considering client and product traits—typically spanning 5 years—with devices to enhance contract fulfillment such as deposits, while maintaining long-term cooperation with key clients including NVIDIA.
- Mass production and shipments of HBM4 commenced from Q2, with mass-production yields and quality achieving the 3E level; ramp-up is progressing stably, targeting full-scale mass production of HBM4E in 2027.
📝 Editor’s Comment (Perspective & Thesis Verification)
The analyst evaluates that although excessive market anxieties amidst extreme volatility triggered a sharp stock decline, the current zone represents an oversold territory supported by the fact that DRAM and NAND inventories are each confined to roughly 3 weeks and that the supply shortage environment persists through 2027. This perspective places greater emphasis on fundamental robustness driven by ultra-low inventory levels and profit trajectories rather than short-term supply-demand noise and consensus misses.
To verify whether this investment thesis unfolds as expected going forward, it is necessary to track the realization of the projected KRW 77.2T operating profit for Q3, whether price increases are successfully driven by expanding demand for server-facing high-value products and high-capacity eSSDs in the second half, and whether separate shareholder return expectations for 2H26 materialize prior to the 3-year shareholder return plan announcement in 1Q27. Such changes can be verified through future quarterly earnings releases, official company IR materials, and regulatory filings.
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