Market: KOSPI (000660)
Brokerage : Daishin Securities
Analyst : Hyungkeun Ryu, RA Jiwon Seo
Investment Rating : BUY (Maintained)
Target Price : 1,700,000 KRW (Maintained)
Core Momentum : Structurally constrained DRAM capacity is expected to sustain supplier pricing power and extend the memory up-cycle, while multi-year LTAs improve cycle durability and rising net cash supports stronger shareholder returns.
📊 1. [Valuation & Key Financial Metrics]
- Target Price / Investment Rating: 1,700,000 KRW / BUY
- Current Price (as of 26.04.23): 1,225,000 KRW
- Market Capitalization: 873,060 billion KRW (Market Cap Weight: 26.25%)
- Capital / Common Shares: 3,581 billion KRW / 712,702 thousand shares (SK Square and 6 others 20.50%, National Pension Service 7.50%)
- Stock Returns (1M / 3M / 6M / 12M):
- Absolute Return: +31.3% / +59.7% / +156.0% / +576.8%
- Relative Return (KOSPI): +9.6% / +23.1% / +52.0% / +163.9%
🚀 2. [Market Opportunities & Business Outlook]
- 1Q26 Performance Review: Revenue reached 52.6 trillion KRW (+60% QoQ, +198% YoY) and operating profit recorded 37.6 trillion KRW (OPM +72%). While slightly missing elevated market consensus, it was a robust performance considering conservative cost recognitions (such as performance bonus provisions).
- Extension of the Super-Cycle (“Shaper and Longer”): Aggressive pricing policies leveraging extreme supply-demand imbalances are expected to unfold, with short-term earnings growth momentum steeper than market expectations despite performance bonus provisioning. From a cycle sustainability perspective, the spread of multi-year contracts is critical, with server DRAM businesses effectively transitioning into long-term contracting structures.
- Supply Constraints and Market Conditions: With DRAM capacity for the end of 2027 practically set, a scramble for limited capacity among customers has begun, intensifying supply chain concerns for uncontracted clients and rendering subsequent contracts more favorable to suppliers. Global DRAM production growth from 2025 to 2027 is limited to an annual average of 21%.
- Shareholder Returns & Financial Outlook: Net cash of 100 trillion KRW is expected to be achieved within Q3 2026, and shareholder returns will be continuously strengthened backed by secured ample financial resources. Enhanced shareholder returns through ADR issuance and special dividends are anticipated to materialize further.
📝 Editor’s Comment (Perspective)
The analyst evaluates SK hynix as a company that maintains a steep earnings growth trajectory and reinforces shareholder returns using ample net cash, leveraging extreme supply-demand gaps and expanding multi-year contracts amid the extended memory super-cycle. This perspective places greater emphasis on cycle sustainability and structural shifts in contracting rather than short-term earnings fluctuations.
To determine whether this investment thesis is unfolding as projected, key items to monitor include the expansion pace of multi-year supply agreements (LTAs) across core segments like server DRAM, the achievement of 100 trillion KRW in net cash within the third quarter of 2026, and the actual execution of shareholder return policies such as ADR issuance and special dividends. These developments can be tracked through upcoming quarterly and annual earnings releases, official corporate IR materials, and regulatory disclosures via DART/KRX.
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