Market: KOSPI (000660)
Brokerage : Hanwha Investment & Securities
Analyst : Kwang-jin Kim (RA Yeong-ju Choi)
Investment Rating : BUY (Maintained)
Target Price : KRW 210,000 (Upgraded)
Core Momentum : 1Q24 earnings surprise and NAND turnaround driven by steep ASP gains, strategic custom HBM (HBM4) via TSMC base die alliance, and revaluation of Solidigm’s QLC eSSD for AI servers
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY (Maintained) / Target Price: KRW 210,000 (Upgraded by +7% from KRW 197,000) / Base Share Price (2024-04-25): KRW 170,600 (Upside potential: 23.1%) / Market Cap: KRW 124.20 Trillion
- Target Price Valuation Logic:
- Raised full-year 2024 operating profit forecast from KRW 12.7 Trillion to KRW 17.6 Trillion (table indicates KRW 17.55 Trillion), elevating target BPS.
- Maintained Target P/B multiple of 2.3x (a 15% premium to the historical P/B band upper end).
- Given expanding earnings visibility and competitive moats in custom HBM and QLC SSDs, recent price corrections are viewed as attractive buying opportunities.
- 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(E): Revenue KRW 62.47 Trillion, Operating Profit KRW 17.55 Trillion (KRW 17.6 Trillion in text), Controlling Net Profit KRW 13.14 Trillion
- 2025(E): Revenue KRW 74.99 Trillion, Operating Profit KRW 22.23 Trillion, Controlling Net Profit KRW 15.79 Trillion
- Valuation Multiples (2022 → 2023 → 2024E → 2025E):
- EPS: KRW 3,063 → -KRW 12,517 → KRW 19,092 → KRW 22,939
- PER: 24.5x → -11.3x → 8.9x → 7.4x
- PBR: 0.9x → 1.9x → 1.9x → 1.5x
- EV/EBITDA: 3.5x → 21.7x → 4.8x → 3.9x
- ROE: 3.6% → -15.6% → 21.9% → 21.4%
- Net Debt: KRW 19.39 Trillion → KRW 25.82 Trillion → KRW 24.42 Trillion → KRW 14.30 Trillion
- Dividend Yield: 1.6% → 0.8% → 0.7% → 0.7%
🚀 2. [Market Opportunities & Business Outlook]
- 1Q24 Earnings Review (Consensus Beat & NAND Turnaround):
- Consolidated Results: Revenue posted KRW 12.4 Trillion (+10% QoQ) and Operating Profit reached KRW 2.9 Trillion (+734% QoQ), significantly beating market consensus.
- Pricing Strategy: Despite subdued bit shipments (DRAM -15% QoQ, NAND 0% QoQ), disciplined profitability-first strategies drove steep Blended ASP surges of +22% QoQ in DRAM and +31% QoQ in NAND.
- NAND Recovery: AI demand tailwinds emerged in earnest, lifting eSSD demand and prices. Combined with ~KRW 900 Billion in inventory valuation allowance reversals, NAND returned to operating profitability.
- AI Market Leadership (Custom HBM & QLC SSD):
- Custom HBM (HBM4): Evolving from commodity HBM to customer-specific solutions via customized base dies. The recent MOU with TSMC is aimed at custom HBM and is highly likely to be applied starting from HBM4, facilitating an advantageous build-to-order business model.
- QLC Enterprise SSD: Recognized as the most suitable replacement for legacy HDDs in AI servers considering price and performance. Solidigm holds strong competitive advantages in QLC eSSDs, triggering a major revaluation of its operational utility.
📝 Editor’s Comment (Perspective)
The analyst views SK hynix not merely as a memory producer benefiting from cyclical price increases, but as an advanced AI technology leader that proved exceptional pricing power in 1Q24 while positioning for long-term dominance through TSMC-partnered custom HBM4 and Solidigm’s high-capacity QLC eSSDs. Greater significance is attached to the shift toward a customized, order-based business model for HBM and upwardly revised 2024 operating profits (raised to KRW 17.6 Trillion) rather than near-term bit shipment moderation.
To assess whether this investment thesis unfolds as anticipated, key verification points include achieving the upgraded 2024 operating profit target of KRW 17.6 Trillion, tracking development progress on custom HBM4 base dies in collaboration with TSMC, and confirming sustained profitability at Solidigm driven by AI server adoption of QLC eSSDs. 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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