Market: KOSPI (000660)
Brokerage : SK Securities
Analyst : Donghee Han
Investment Rating : BUY (Maintain)
Target Price : KRW 4,000,000 (Maintain)
Core Momentum : Persistently low inventories and sub-70% demand fulfillment are expected to sustain tight memory supply-demand conditions, while LTAs enhance earnings visibility and durability and the anticipated rollout of shareholder returns supports a shift toward evaluating sustainable earnings generation.
📊 1. [Valuation & Key Financial Metrics]
- Stock Performance & Investment Rating
- Investment Rating: BUY (Maintain)
- Target Price: KRW 4,000,000 (Maintain)
- Current Price (As of 26/07/29): KRW 1,401,000
- Upside Potential: 185.5%
- Valuation Multiples
- Annual P/E Trend: 2026E 3.8x → 2027E 3.1x → 2028E 2.7x
- Annual P/B Trend: 2026E 2.6x → 2027E 1.4x → 2028E 0.9x
- Annual EV/EBITDA Trend: 2026E 2.8x → 2027E 1.2x → 2028E 0.4x
- Key Financial Forecasts
- 2026E: Revenue KRW 348.72T, Operating Profit KRW 273.74T, Net Profit (Controlling Interest) KRW 269.30T, EPS KRW 368,652, ROE 105.0%, Dividend Payout Ratio 0.8%
- 2027E: Revenue KRW 535.48T, Operating Profit KRW 425.28T, Net Profit (Controlling Interest) KRW 325.36T, EPS KRW 445,393, ROE 58.7%, Dividend Payout Ratio 0.7%
- 2028E: Revenue KRW 642.29T, Operating Profit KRW 491.92T, Net Profit (Controlling Interest) KRW 378.18T, EPS KRW 517,701, ROE 41.9%, Dividend Payout Ratio 0.6%
🚀 2. [Market Opportunities & Business Outlook]
- 2Q26 Operating Profit Recorded at KRW 61 Trillion
- SK hynix’s 2Q26 operating profit reached KRW 61T (+19% QoQ), meeting SK Securities’ estimate of KRW 60.7T while falling slightly short of the market consensus.
- The main reason was the postponement of full-scale high-value memory shipments to 3Q26. Shipments are estimated at +9% for DRAM and +14% for NAND, with prices up +29% for DRAM and +54% for NAND, yielding an estimated operating profit of KRW 46T for DRAM and KRW 15T for NAND.
- Operating margins stood at 79% for DRAM and 69% for NAND, maintaining industry-leading profitability despite unfavorable product mixes prior to the full-scale HBM4 ramp in the second half, driven by a higher HBM proportion than competitors.
- Sustained Industry Strength and Inventory Status
- Despite market concerns, industry inventory levels remain at roughly half of normal ranges—3 weeks for suppliers, 3 weeks for hyperscalers, and 5-7 weeks for channels—with demand fulfillment rates estimated below 70%.
- LTA effects do not signal an end to growth; rather, they enhance demand forecasting, improve earnings sustainability, and elevate price elasticity in non-LTA and spot markets via dual-market dynamics.
- Contrary to market worries, SK hynix’s 3Q26 DRAM prices are projected to beat expectations, rising +19% QoQ.
- Reasons for Maintaining Target Price and Earnings Outlook
- Earnings forecasts for ’26 and ’27 are maintained (operating profits of KRW 274T and KRW 425T, respectively), supported by sustained AI facility investments and earnings visibility secured via LTAs.
- The formal rollout of shareholder returns in the second half will serve as a critical inflection point where the company is evaluated based on ‘earnings generation and durability’ rather than simple ‘earnings growth rates’.
- Free cash flow (FCF) for SK hynix is projected at KRW 150T, KRW 261T, and KRW 346T for 2026, 2027, and 2028, respectively, with shareholder return visibility anticipated around or prior to the 3Q26 earnings release, where net cash is expected to hit KRW 100 trillion.
📝 Editor’s Comment (Perspective & Thesis Verification)
The analyst evaluates SK hynix as an enterprise maintaining uninterrupted profit growth trends despite market skepticism, securing industry-leading profitability and structural industry strength through LTA effects and constrained physical capacity. This perspective places greater emphasis on tight supply-demand fundamentals—characterized by low inventories (~3 weeks) and sub-70% fulfillment rates—and the upcoming materialization of shareholder returns rather than short-term shipment delays or product mix noise.
To verify whether this investment thesis unfolds as expected going forward, it is necessary to track whether full-scale high-value memory shipments in 3Q26 push DRAM prices up by +19% QoQ as projected, whether supplier inventory and demand fulfillment indicators remain tight, and whether shareholder returns formally launch in the second half alongside the attainment of KRW 100 trillion in net cash. Such changes can be verified through future quarterly earnings releases, official company IR materials, and regulatory filings.
📢 Disclaimer & Source
Source: This content has been structured and newly written based on officially disclosed financial facts and data from brokerage reports.
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