Market: KOSPI (000660)
Brokerage : DS Investment & Securities
Analyst : Surim Lee
Investment Rating : BUY (Maintained)
Target Price : 1,600,000 KRW (Upgraded)
Core Momentum : Sharp DRAM and NAND ASP increases and a richer high-value product mix are expected to drive continued earnings upgrades, while constrained wafer input growth keeps memory supply tight through 2027.
📊 1. [Valuation & Key Financial Metrics]
- Target Price / Investment Rating: 1,600,000 KRW / BUY
- Current Price (as of 04/22): 1,223,000 KRW (Upside potential: 30.8%)
- Market Capitalization: 871,635 billion KRW (Common stock)
- Key Financial Metrics (2025A / 2026F / 2027F):
- Revenue: 97,147 billion KRW / 306,708 billion KRW / 405,280 billion KRW
- Operating Profit: 47,206 billion KRW / 223,489 billion KRW / 298,574 billion KRW
- Operating Margin: 48.6% / 72.9% / 73.7%
- Net Income Attributable to Controlling Interests: 37,427 billion KRW / 181,435 billion KRW / 242,662 billion KRW
- EPS: 51,410 KRW / 249,223 KRW / 333,326 KRW
- ROE: 41.0% / 91.4% / 59.3%
- PER: 10.1x / 4.9x / 3.7x
- PBR: 3.5x / 3.1x / 1.7x
🚀 2. [Market Opportunities & Business Outlook]
- 1Q26 Performance Summary: 1Q26 revenue reached 52.6 trillion KRW (+60% QoQ) and operating profit recorded 37.6 trillion KRW (+96% QoQ, OPM 72%), slightly missing consensus on revenue but beating expectations on operating margin.
- ASP and Bit Growth Trends: Driven by high-value product expansion, DRAM ASP increased 65% QoQ and NAND ASP jumped 74% QoQ, significantly outperforming expectations. Bit growth (B/G) stood at +0.3% QoQ for DRAM and -13% QoQ for NAND, affected by base effects from the previous quarter, reduced retail sales, and longer production lead times. Operating margins were 78% for DRAM and 49% for NAND.
- Supply and Production Outlook: While wafer input is expected to grow only in the single digits this year, production B/G will meaningfully increase via tech migrations, keeping supply conditions tight through 2027. Solidigm Dalian Phase 2 capacity expansion is resuming, and over 50% of domestic capacity is planned to transition to 321-layer nodes by year-end.
- Earnings Forecast Upgrades: Projected operating profit for 2Q26 has been revised upward to 56 trillion KRW (+50% QoQ, OPM 73%). Full-year operating profit forecasts are upgraded to 223 trillion KRW (+373% YoY, OPM 73%) for 2026 and 299 trillion KRW (+34% YoY, OPM 74%) for 2027.
- Shareholder Return & Other Catalysts: Additional shareholder return plans, including share buybacks and cancellations alongside dividends, are under active review for execution within the year. Preparations for an ADR listing in the U.S. market are underway, providing further momentum on the supply-demand front in the second half.
📝 Editor’s Comment (Perspective)
The analyst evaluates that substantial ASP surges and high-value product expansion in both DRAM and NAND are directly driving earnings upgrades, while tight supply conditions are expected to persist through 2027 amid constrained wafer input growth and tech migration-driven production responses. This perspective focuses on earnings growth momentum derived from price increases and enriched product mix rather than short-term shipment fluctuations.
To determine whether this investment thesis is unfolding as projected, key items to monitor include whether the upward trends in DRAM and NAND ASPs alongside product mix improvements translate into the projected 56 trillion KRW operating profit for Q2 and full-year earnings, as well as whether tight supply conditions are sustained under limited wafer input growth. These developments can be tracked through upcoming quarterly and annual earnings releases, official corporate IR materials, and regulatory disclosures via DART/KRX.
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