Market: KOSPI (000660)
Brokerage : SK Securities
Analyst : Dong-hee Han
Investment Rating : BUY (Maintained)
Target Price : KRW 340,000 (Maintained)
Core Momentum : Expanding HBM earnings contribution driven by 8-high HBM3e recognition, sustained price-driven upcycle through disciplined shipments, and compelling oversold valuation
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY (Maintained) / Target Price: KRW 340,000 (Maintained) / Base Share Price (2024-07-26): KRW 191,800 (Upside potential: 77.3%)
- Valuation Assessment:
- Trading at 1.57x 12M Fwd. P/B, the valuation has retreated toward the peak multiples of past conventional commodity cycles, entering an oversold territory.
- Re-acceleration of CapEx projections from the top 4 North American CSPs and upward consensus revisions for 2024–2025 operating profits across the top 3 DRAM makers support the upside.
- Financial Performance & Forecasts:
- 2021: Revenue KRW 42.998 Trillion, Operating Profit KRW 12.410 Trillion, Net Profit (Controlling) KRW 9.602 Trillion
- 2022: Revenue KRW 44.622 Trillion, Operating Profit KRW 6.809 Trillion, Net Profit (Controlling) KRW 2.230 Trillion
- 2023: Revenue KRW 32.766 Trillion, Operating Profit -KRW 7.730 Trillion, Net Profit (Controlling) -KRW 9.112 Trillion
- 2024(E): Revenue KRW 67.071 Trillion, Operating Profit KRW 23.842 Trillion (KRW 24 Trillion per report text, turning profitable YoY), Net Profit (Controlling) KRW 17.163 Trillion
- 2025(E): Revenue KRW 92.327 Trillion, Operating Profit KRW 40.003 Trillion (KRW 40 Trillion per report text, +68% YoY), Net Profit (Controlling) KRW 29.665 Trillion
- 2026(E): Revenue KRW 102.483 Trillion, Operating Profit KRW 43.555 Trillion, Net Profit (Controlling) KRW 32.606 Trillion
- Valuation Multiples (2021 → 2022 → 2023 → 2024E → 2025E → 2026E):
- EPS: KRW 13,190 → KRW 3,063 → -KRW 12,517 → KRW 23,576 → KRW 40,748 → KRW 44,788
- PER: 9.9x → 24.5x → -11.3x → 8.1x → 4.7x → 4.3x
- PBR: 1.5x → 0.8x → 1.8x → 1.9x → 1.4x → 1.1x
- EV/EBITDA: 4.6x → 3.5x → 21.5x → 4.8x → 2.7x → 2.1x
- ROE: 16.8% → 3.6% → -15.6% → 27.8% → 35.1% → 28.4%
🚀 2. [Market Opportunities & Business Outlook]
- Accelerating HBM Contribution Cycle:
- 8-High HBM3e Ramp: Initial revenue recognition of 8-high HBM3e will accelerate HBM’s share within total DRAM earnings.
- HBM Revenue Share Trajectory: 20% in 2Q24 (+5%p QoQ) → projected to reach 39% by 4Q24 → exceeding 40% in 2025.
- Secured Earnings Foundation: Expanding Long-Term Agreements (LTAs) reinforce earnings stability, while persistent HBM strength and rising process difficulty solidify downside support for commodity memory prices.
- Price-Driven Rather Than Volume-Driven Cycle:
- The essence of the ongoing memory upcycle stems from ASP increases rather than shipment expansion, offering superior operating leverage.
- 3Q24 Shipment Guidance: DRAM low-single-digit growth, NAND mid-single-digit decline (interpreted as a strategic shipment discipline focused on end-demand to sustain price momentum).
- 2H Earnings Visibility:
- As the positive impact from commodity inventory valuation allowance reversals diminishes in the second half, expanding HBM volume will serve as the primary growth engine for operating profits.
📝 Editor’s Comment (Perspective)
The analyst views SK hynix not as a generic memory maker pursuing volume expansion, but as a premier AI semiconductor leader that leverages Long-Term Agreements and disciplined shipment control to dictate pricing power and maximize operating leverage. Greater significance is attached to the structural price-driven upcycle led by 8-high HBM3e adoption and high earnings visibility rather than short-term shipment softness or broader market sentiment volatility.
To assess whether this investment thesis unfolds as anticipated, key verification points include whether HBM revenue reaches the projected 39% share of DRAM sales by 4Q24, the persistence of price gains driven by end-demand shipment discipline, and the follow-through of expanding CapEx by top North American CSPs into sustained memory demand. These developments can be verified through future quarterly earnings releases, official company IR materials, DART/KRX filings, and regular financial statements.
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