[Research] SK hynix (000660 / SKHY) – DS Investment & Securities | Resilient HBM Growth · Oversupply Concerns Eased · Valuation Appeal / 2024-09-24

Market: KOSPI (000660)

Brokerage : DS Investment & Securities

Analyst : Soo-rim Lee

Investment Rating : BUY (Maintained)

Target Price : KRW 290,000 (Maintained)

Core Momentum : Sustained earnings resilience and price premium driven by 12-high HBM3e ramp-up and structural AI server demand, refuting market concerns over memory oversupply and legacy softness

📊 1. [Valuation & Key Financial Metrics]

• Investment Rating & Target Price: BUY (Maintained) / Target Price: KRW 290,000 (Maintained) / Base Share Price (2024-09-23): KRW 162,000 (Upside potential: 79.0%)
• Valuation Assessment:
  • Even considering downward revisions to 2025 operating profit forecasts, the stock trades at an oversold level of 1.3x 12M Fwd P/B.
  • BUY rating and target price maintained due to the absence of HBM oversupply signals and the low likelihood of prolonged conventional DRAM softness.
• Financial Performance & Forecasts:
  • 2021: Revenue KRW 42.998 Trillion, Operating Profit KRW 12.410 Trillion, Controlling Net Profit KRW 9.602 Trillion
  • 2022: Revenue KRW 44.622 Trillion, Operating Profit KRW 6.809 Trillion, Controlling Net Profit KRW 2.230 Trillion
  • 2023: Revenue KRW 32.766 Trillion, Operating Profit -KRW 7.730 Trillion, Controlling Net Profit -KRW 9.112 Trillion
  • 2024(F): Revenue KRW 66.148 Trillion, Operating Profit KRW 23.074 Trillion, Controlling Net Profit KRW 16.702 Trillion
  • 2025(F): Revenue KRW 89.391 Trillion, Operating Profit KRW 34.817 Trillion, Controlling Net Profit KRW 25.059 Trillion
• Valuation Multiples (2021 → 2022 → 2023 → 2024F → 2025F):
  • EPS: KRW 13,190 → KRW 3,063 → -KRW 12,517 → KRW 22,943 → KRW 34,422
  • PER: 9.9x → 24.5x → -11.3x → 7.1x → 4.7x
  • PBR: 1.5x → 0.9x → 1.9x → 1.7x → 1.3x
  • EV/EBITDA: 4.7x → 3.5x → 21.7x → 3.2x → 2.0x
  • ROE: 16.8% → 3.6% → -15.6% → 27.2% → 30.8%
  • Operating Margin: 28.9% → 15.3% → -23.6% → 34.9% → 38.9%

🚀 2. [Market Opportunities & Business Outlook]

• 3Q24 Earnings Preview:
  • Consolidated Forecast: Revenue projected at KRW 17.8 Trillion (+8% QoQ, +96% YoY) and Operating Profit at KRW 6.5 Trillion (+19% QoQ, turning profitable YoY), slightly below consensus of KRW 6.9 Trillion.
  • DRAM: Bit Growth +2% QoQ, ASP +10% QoQ estimated.
  • NAND: Bit Growth -4% QoQ, ASP +8% QoQ estimated.
  • Segment Dynamics: While overall shipment volume slows due to legacy IT set demand uncertainty, the product portfolio centered on HBM and server DDR5 protects earnings resilience.
• HBM Earnings Forecast & Easing Oversupply Concerns:
  • HBM Performance Projections:
    • 2024: HBM Revenue KRW 12.5 Trillion (19% of total revenue), HBM Operating Profit KRW 5.9 Trillion.
    • 2025: HBM Revenue KRW 23.0 Trillion (26% of total revenue), HBM Operating Profit KRW 11.5 Trillion.
  • Key Factors Refuting Oversupply:
    1. Competitors are failing to demonstrate meaningful volume increases.
    2. Generational migration to 12-high HBM3e and HBM4 introduces severe yield penalties, constraining overall industry supply.
    3. Ramp-up of key customers’ new AI chips (Blackwell) and broadening inference AI demand expand total addressable customer base.
  • 12-High HBM3e & ASP Outlook: Commercial shipments to major customers begin in 4Q24 for Blackwell integration. HBM pricing will stay resilient in 2025 supported by new product price premiums.

📝 Editor’s Comment (Perspective)

The analyst views SK hynix not as a commoditized memory manufacturer impaired by macroeconomic slowdowns or legacy consumer set weakness, but as a premier AI memory leader that continues to capture pricing premiums and structurally refute oversupply narratives through high manufacturing barriers in next-generation HBM architectures. Greater significance is attached to the massive earnings power of HBM (projected 2025 HBM operating profit of KRW 11.5 Trillion) and deep valuation undervaluation (12M Fwd P/B 1.3x) rather than short-term shipment volatility.

To assess whether this investment thesis unfolds as anticipated, key verification points include the smooth execution of 12-high HBM3e shipments for Blackwell in 4Q24, the realization of the projected KRW 23.0 Trillion in HBM revenue for 2025, and whether generational yield challenges across the industry preserve HBM price premiums. These developments can be verified through future quarterly earnings releases, official company IR materials, DART/KRX filings, and regular financial statements.

📢 Disclaimer & Source

Source: This content has been structured and newly written based on officially disclosed financial facts and data from brokerage reports.

Investment Risk Notice: This content is provided for informational and linguistic reference purposes only. Under no circumstances does it constitute financial advice or a recommendation to buy or sell any specific securities. All investment decisions and financial responsibilities rest entirely with the investor.

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