Market: KOSPI (000660)
Brokerage : Hyundai Motor Securities
Analyst : Keochang Noh (RA: Donguk Youn)
Investment Rating : BUY (Maintained)
Target Price : KRW 405,000 (Raised)
Core Momentum : Expanding AI inference and RAG workloads are expected to drive sustained HBM and enterprise SSD demand, while tighter legacy DRAM supply supports favorable pricing and additional earnings upside.
📊 1. [Valuation & Key Financial Metrics]
- Target Price & Rating: Raised the 6-month target price to KRW 405,000 (applying a Target P/B of 2.3x to the 12-month forward estimated net equity BPS) and maintained a BUY rating.
- Earnings Estimates Revision: Q3 revenue and operating profit are projected to reach KRW 24.5 trillion and KRW 11.3 trillion, exceeding previous consensus estimates by 4.3% and 1.2%, respectively.
- Key Financial Metrics (2025F / 2026F):
- Revenue: KRW 91.803 trillion (2025F) / KRW 117.454 trillion (2026F)
- Operating Profit: KRW 40.763 trillion (2025F) / KRW 58.269 trillion (2026F)
- EPS: KRW 46,372 (2025F) / KRW 64,075 (2026F)
- P/E: 7.1x (2025F) / 5.2x (2026F)
- P/B: 2.3x (2025F) / 1.6x (2026F)
- ROE: 37.7% (2025F) / 36.4% (2026F)
🚀 2. [Market Opportunities & Business Outlook]
- Continued Expansion in HBM & AI Infrastructure Demand: With the advent of the AI Agentic era, demand for inference semiconductors is increasing. In particular, the adoption of Retrieval Augmented Generation (RAG) to enhance LLM functionality is driving up the need for larger database scales, which in turn fosters growth in SSD demand.
- Product Competitiveness & Supply Outlook: The portion of HBM3e 12-high products is expected to remain above 60% in Q3 following Q2. A steep growth trajectory is projected to continue through 2028, led by the full-scale supply of Rubin Ultra, which features 1TB of content and adopts HBM4e 16-high packaged via chiplet technology on 4 reticles.
- Legacy Memory Supply-Demand Improvement: General DRAM supply and demand conditions are improving as Chinese competitors like CXMT reallocate general DRAM wafer capacities to HBM wafers, with general memory price trends remaining favorable through Q1 of next year.
📝 Editor’s Comment (Perspective)
The analyst assesses that the continued rise in demand for HBM and Enterprise SSDs, driven by expanding AI infrastructure investments, will propel SK hynix’s earnings growth. The perspective highlights that, combined with favorable FX rates and rising legacy memory prices, the company retains significant earnings upside potential.
To determine whether this investment thesis is unfolding as expected, key items to monitor include whether the adoption of RAG for enhanced AI model accuracy leads to substantial growth in Enterprise SSD demand, and whether the improved supply-demand balance and price strength of legacy DRAM are maintained through Q1 of next year to support earnings. These indicators can be tracked through upcoming quarterly and annual earnings releases, company IR materials, and regulatory filings via DART.
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