Market: KOSPI (000660)
Brokerage : Mirae Asset Securities
Analyst : Younggun Kim
Investment Rating : BUY (Maintained)
Target Price : 1,540,000 KRW (Maintained)
Core Momentum : Expanding multi-year LTAs with big-tech customers are expected to provide downside protection for memory pricing and reduce oversupply risk, supporting sustained high margins and structurally elevated ROE despite macro and consumer-demand uncertainties.
📊 1. [Valuation & Key Financial Metrics]
- Target Price / Investment Rating: 1,540,000 KRW / BUY (Maintain)
- Current Price (as of 26/4/3): 876,000 KRW (Upside potential: 75.8%)
- Market Capitalization: 624,327 billion KRW (Free float ratio: 75.2%)
- Key Financial Metrics (2024 / 2025 / 2026F / 2027F / 2028F):
- Revenue: 66,193 billion KRW / 97,147 billion KRW / 324,319 billion KRW / 439,423 billion KRW / 498,732 billion KRW
- Operating Profit: 23,467 billion KRW / 47,206 billion KRW / 254,404 billion KRW / 346,929 billion KRW / 384,524 billion KRW
- Operating Profit Margin: 35.5% / 48.6% / 78.4% / 79.0% / 77.1%
- Net Income: 19,789 billion KRW / 42,919 billion KRW / 189,005 billion KRW / 264,968 billion KRW / 302,632 billion KRW
- EPS: 27,182 KRW / 58,955 KRW / 264,580 KRW / 371,779 KRW / 424,627 KRW
- P/E: 6.4x / 11.0x / 3.3x / 2.4x / 2.1x
- P/B: 1.7x / 3.9x / 2.0x / 1.1x / 0.7x
- ROE: 31.1% / 44.2% / 88.3% / 60.4% / 42.1%
🚀 2. [Market Opportunities & Business Outlook]
- 1Q26 Earnings Outlook: 1Q26F performance is estimated at revenue of 53.5 trillion KRW (+63.0% QoQ) and operating profit of 38.9 trillion KRW (+103.1% QoQ), outperforming market consensus (OP 35.6 trillion KRW). DRAM and NAND ASP growth rates are estimated at +60.8% and +55.3% respectively, while lower cost (Cash cost) burden estimates have lifted OPMs to 78.7% and 55.4%.
- Mid-to-Long-Term Earnings Growth & Shareholder Returns: Earnings expansion is expected to continue, with 2Q26 operating profit projected at 61.9 trillion KRW and full-year 2026 operating profit at 254.4 trillion KRW (YoY +439%). Backed by strong profit generation capacity, possibilities are raised for utilizing funds raised via ADR issuance for domestic share buybacks and cancellations, acting as a multiplier effect for re-rating in a high-valuation market friendly to shareholder returns.
- Significance of Long-Term Agreements (LTAs): LTAs spanning 3 years or more are being established between memory makers and big tech clients, with clients prioritizing volume security over price negotiations. Customers pay a certain ratio of prepayments and undergo quarterly price re-negotiations to align prepayment collateral ratios. As the proportion of long-term contract clients expands, targets for market share competition diminish for sellers, alleviating oversupply concerns.
- Profitability Sustainability: Despite slowing consumer set demand and big tech FCF burdens, maintaining LTA pricing levels alone will enable sustainable ROE of around 60%, serving as a catalyst for P/B band upward re-ratings.
📝 Editor’s Comment (Perspective)
The analyst evaluates that despite macro uncertainties and memory spot price corrections, SK hynix has entered a phase of securing price downside rigidity through the expansion of 3+ year long-term supply agreements (LTAs), maintaining stable high margins supported by high earnings visibility and an ROE around 60%. This perspective places greater emphasis on structural long-term contracts and fundamental earning power rather than short-term market fluctuations.
To determine whether this investment thesis is unfolding as projected, key items to monitor include the delivery of the projected 38.9 trillion KRW operating profit for Q1, the expansion and maintenance of 3+ year LTAs with big tech clients along with prepayment and price re-negotiation structures, and the execution of shareholder return policies such as share buybacks and cancellations utilizing ADR proceeds. These developments can be tracked through upcoming quarterly and annual earnings releases, official corporate IR materials, and regulatory disclosures via DART/KRX.
📢 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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