Market: KOSPI (000660)
Brokerage : DS Investment & Securities
Analyst : Soo-rim Lee
Investment Rating : BUY (Maintained)
Target Price : KRW 230,000 (Upgraded)
Core Momentum : 1Q24 earnings surprise driven by an earlier-than-expected NAND turnaround, robust QLC eSSD sales, industry-wide HBM capacity prioritization limiting commodity supply, and upward annual earnings revisions
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY (Maintained) / Target Price: KRW 230,000 (Upgraded) / Base Share Price (2024-04-25): KRW 170,600 (Upside potential: 34.8%) / Market Cap: KRW 124.20 Trillion
- Target Price Valuation Logic:
- Raised full-year operating profit forecasts for 2024 and 2025 to KRW 17.5 Trillion (table indicates KRW 17.50 Trillion) and KRW 25.4 Trillion (table indicates KRW 25.44 Trillion), respectively.
- Target price raised to KRW 230,000 by applying a Target P/B multiple of 2.0x to 2025E BPS of KRW 112,249.
- Upgrade drivers: Earlier-than-expected NAND return to profitability and margin expansion from accelerating eSSD sales.
- 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 63.251 Trillion, Operating Profit KRW 17.498 Trillion (KRW 17.5 Trillion in text), Controlling Net Profit KRW 12.368 Trillion
- 2025(F): Revenue KRW 76.308 Trillion, Operating Profit KRW 25.439 Trillion (KRW 25.4 Trillion in text), Controlling Net Profit KRW 17.611 Trillion
- Valuation Multiples (2021 → 2022 → 2023 → 2024F → 2025F):
- EPS: KRW 13,190 → KRW 3,063 → -KRW 12,517 → KRW 16,989 → KRW 24,191
- PER: 9.9x → 24.5x → -11.3x → 10.0x → 7.1x
- PBR: 1.5x → 0.9x → 1.9x → 1.9x → 1.5x
- EV/EBITDA: 4.7x → 3.5x → 21.7x → 4.2x → 2.9x
- ROE: 16.8% → 3.6% → -15.6% → 20.9% → 24.0%
- Operating Margin: 28.9% → 15.3% → -23.6% → 27.7% → 33.3%
🚀 2. [Market Opportunities & Business Outlook]
- 1Q24 Earnings Surprise Review:
- Consolidated Results: Revenue posted KRW 12.4 Trillion (+10% QoQ, +144% YoY) and Operating Profit reached KRW 2.9 Trillion (+734% QoQ, turning profitable YoY, OPM 23%), beating market consensus (KRW 2.0–2.5 Trillion).
- Segment Operating Profits: DRAM operating profit estimated at KRW 2.7 Trillion (Bit Growth -16%, ASP +20%), NAND operating profit at KRW 0.2 Trillion (Bit Growth -0.2%, ASP +30%).
- Drivers Behind Beat: NAND returned to operating profit ahead of schedule driven by steep price increases and company-wide inventory valuation reversals (~KRW 900 Billion).
- 2024 Market Projections & HBM Profit Contribution:
- HBM Weightings: In 2024, HBM is projected to account for ~9–10% of total Bit shipments, 25–28% of total revenue, and approximately 45–50% of total operating profit.
- Solidigm & QLC eSSD: Solidigm’s high concentration in QLC-based eSSDs positions it as a major beneficiary of rising storage demand from on-premise and inference AI deployments.
- Supply Discipline: Broad memory capacity growth remains constrained as manufacturers prioritize wafer allocation to HBM alongside gradual utilization recoveries.
- Gen-AI Expansion: Enterprise on-premise AI server deployments are expanding the overall addressable market (TAM) for high-performance memory and storage.
📝 Editor’s Comment (Perspective)
The analyst views SK hynix not merely as a single-product AI memory vendor, but as the premier Top Pick across the global AI value chain that has confirmed a comprehensive operational turnaround through an earlier-than-expected NAND recovery alongside dominant HBM profitability. Greater significance is attached to HBM’s projected 45–50% contribution to 2024 operating profit and supply discipline driven by HBM wafer allocation rather than uncertainties surrounding conventional IT demand.
To assess whether this investment thesis unfolds as anticipated, key verification points include confirming that HBM delivers its estimated 45–50% share of full-year 2024 operating profit, monitoring Solidigm’s profitability in QLC eSSDs amid expanding on-premise AI deployments, and verifying that constrained DRAM and NAND supply conditions continue to support upgraded annual earnings targets (KRW 17.5 Trillion in 2024 and KRW 25.4 Trillion in 2025). 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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Source: This content has been structured and newly written based on officially disclosed financial facts and data from brokerage reports.
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