Market: KOSPI (000660)
Brokerage : Kiwoom Securities
Analyst : Yuak Pak (Semiconductor)
Investment Rating : Marketperform (Maintain)
Target Price : KRW 180,000 (Downgraded)
Core Momentum : Strong 1Q24 beat driven by one-off inventory reversals and 2Q24 OP projected at KRW 4.3T, offset by rising risks of 2H HBM competition, potential oversupply, and AI sentiment peak-out
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: Marketperform (Maintain) / Target Price: KRW 180,000 (Downgraded) / Base Share Price (2024-04-25): KRW 170,600 / Market Cap: KRW 124.20 Trillion / Dividend Yield (24E): 0.8%
- Target Price Valuation Logic:
- Target price trimmed to KRW 180,000 to reflect intensifying industry competition and potential oversupply in the HBM market (downward pricing risks), alongside peak-out sentiment in the broader AI semiconductor space.
- Financial Performance & Forecasts:
- 2022: Revenue KRW 44.62 Trillion, Operating Profit KRW 6.81 Trillion, Controlling Net Profit KRW 2.23 Trillion
- 2023: Revenue KRW 32.77 Trillion, Operating Profit -KRW 7.73 Trillion, Controlling Net Profit -KRW 9.11 Trillion
- 2024(F): Revenue KRW 64.45 Trillion, Operating Profit KRW 18.38 Trillion, Controlling Net Profit KRW 13.14 Trillion
- 2025(F): Revenue KRW 75.62 Trillion, Operating Profit KRW 27.23 Trillion, Controlling Net Profit KRW 20.74 Trillion
- Valuation Multiples (2022 → 2023 → 2024F → 2025F):
- EPS: KRW 3,063 → -KRW 12,517 → KRW 18,045 → KRW 28,485
- BPS (24E): KRW 90,485
- PER: 24.5x → -11.3x → 9.5x → 6.0x
- PBR: 0.9x → 1.9x → 1.9x → 1.4x
- EV/EBITDA: 3.7x → 22.0x → 4.2x → 2.9x
- ROE: 3.6% → -15.6% → 22.0% → 27.3%
- Net Debt-to-Equity Ratio: 35.4% → 52.3% → 16.2% → -5.0%
🚀 2. [Market Opportunities & Business Outlook]
- 1Q24 Earnings Review:
- Consolidated Results: Revenue posted KRW 12.4 Trillion (+10% QoQ) and Operating Profit reached KRW 2.9 Trillion (+734% QoQ). Revenue was in line with estimates (KRW 12.6 Trillion), while operating profit exceeded forecasts (KRW 2.2 Trillion) due to larger-than-expected inventory valuation allowance reversals.
- DRAM Segment: Blended ASP increase (+22% QoQ) offset shipment declines (Bit Growth -15% QoQ), driving profitability improvements.
- NAND Segment: Sharp price rebounds (Blended ASP +31% QoQ) triggered substantial inventory reversals. However, bit shipments (Flat QoQ) missed market expectations (+5% QoQ), indicating muted real-market absorption of eSSD demand.
- 2Q24 Earnings Outlook:
- Consolidated Forecast: Revenue projected at KRW 15.6 Trillion (+26% QoQ) and Operating Profit at KRW 4.3 Trillion (+48% QoQ), beating consensus (Revenue KRW 14.9 Trillion, Operating Profit KRW 4.3 Trillion).
- DRAM Segment: Rebounding shipments (Bit Growth +16% QoQ) and price gains (Blended ASP +13% QoQ) will drive quarterly operating profit to KRW 4.1 Trillion (OPM 40%), with upside potential stemming from Taiwan earthquake supply impacts.
- NAND Segment: Profitability will expand on sharp price gains (Blended ASP +11% QoQ) despite subdued volume growth (Bit Growth +1% QoQ).
- Risk Factors & Market Headwinds:
- HBM Competition & Oversupply: The HBM segment, which provided valuation premiums over competitors, faces increasing competition and potential oversupply risks starting in 2H24.
- AI Sentiment Peak-Out: Subdued market reactions following recent US tech earnings highlight deteriorating sentiment around AI investments, capping near-term upside potential.
📝 Editor’s Comment (Perspective)
The analyst adopts a cautious stance on SK hynix, viewing the stock not merely through near-term quarterly profit rebounds (1Q inventory-driven beat and 2Q OP projected at KRW 4.3 Trillion), but as an asset where cyclical optimism is already priced in, leaving it vulnerable to 2H HBM competition and potential oversupply. Greater importance is attached to target price adjustments (trimming target price to KRW 180,000) reflecting HBM pricing pressure and AI semiconductor sentiment peak-out rather than short-term price momentum.
To assess whether this investment thesis unfolds as anticipated, key verification points include achieving 2Q24 operating profit of KRW 4.3 Trillion (DRAM OPM 40%), monitoring whether competitor entries create HBM oversupply and pricing pressure in 2H24, and confirming a tangible recovery in NAND bit shipments beyond flat 1Q volumes to validate enterprise SSD end-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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