Market: KOSPI (000660)
Brokerage : Hi Investment & Securities
Analyst : Myung-sub Song
Investment Rating : Hold (Maintained)
Target Price : KRW 195,000 (Downgraded)
Core Momentum : Strong 1Q24 beat and 2Q24 OP projected at KRW 6.1T, offset by intensifying HBM competition from Micron and Samsung, alongside potential OECD leading indicator downturns prompting a target P/B trim
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: Hold (Maintained) / Target Price: KRW 195,000 (Downgraded) / Base Share Price (2024-04-25): KRW 170,600 (Upside potential: 14.3%) / Market Cap: KRW 130.90 Trillion
- Target Price Valuation Logic:
- Target price trimmed to KRW 195,000 by lowering the Target P/B multiple to 2.1x to reflect intensifying HBM competition, delayed US interest rate cuts, and potential downturn risks in the OECD leading indicator.
- Financial Performance & Forecasts:
- 2023: Revenue KRW 32.77 Trillion, Operating Profit -KRW 7.73 Trillion, Net Profit -KRW 9.11 Trillion
- 2024(E): Revenue KRW 64.71 Trillion, Operating Profit KRW 24.58 Trillion, Net Profit KRW 15.04 Trillion
- 2025(E): Revenue KRW 74.42 Trillion, Operating Profit KRW 21.35 Trillion, Net Profit KRW 13.87 Trillion
- 2026(E): Revenue KRW 81.86 Trillion, Operating Profit KRW 23.98 Trillion, Net Profit KRW 15.83 Trillion
- Valuation Multiples (2023 → 2024E → 2025E → 2026E):
- EPS: -KRW 12,517 → KRW 20,663 → KRW 19,045 → KRW 21,739
- BPS: KRW 73,495 → KRW 93,160 → KRW 111,208 → KRW 131,949
- PER: N/A → 8.3x → 9.0x → 7.8x
- PBR: 1.9x → 1.8x → 1.5x → 1.3x
- EV/EBITDA: 21.2x → 3.8x → 3.8x → 3.1x
- ROE: -15.6% → 24.8% → 18.6% → 17.9%
- Dividend Yield: 0.2% → 0.2% → 0.2% → 0.2%
🚀 2. [Market Opportunities & Business Outlook]
- 1Q24 Earnings Review:
- Consolidated Results: Revenue posted KRW 12.4 Trillion and Operating Profit reached KRW 2.9 Trillion, beating market expectations.
- Drivers Behind Beat: DRAM and NAND ASP jumped over +20% QoQ and +30% QoQ respectively, supported by ~KRW 900 Billion in inventory valuation allowance reversals.
- NAND Turnaround: Steep price surges and massive inventory reversals drove the NAND division back to operating profitability.
- 2Q24 Earnings Outlook:
- Operating Profit Forecast: Projected at KRW 6.1 Trillion.
- Shipment Guidance: DRAM Bit Growth guided at mid-10% range QoQ; NAND Bit Growth guided Flat QoQ.
- ASP Dynamics: Supply disruptions from the Taiwan earthquake prompted aggressive vendor pricing (requesting 20–25% hikes), leading to estimated ASP gains of +14% QoQ in DRAM and +18% QoQ in NAND (with mobile price increases potentially moderated by Chinese smartphone inventory adjustments).
- NAND Momentum: NAND price gains will continue outperforming DRAM through 2Q24 due to slow capacity resumption and declining customer eSSD inventories.
- HBM Competition & Macro Risk Variables:
- Competitive Landscape: Micron has reportedly begun supplying 8-high HBM3E in small volumes to the primary customer. Samsung Electronics is expected to begin full-scale HBM3 shipments to the primary customer in 2Q24 while qualifying 12-high HBM3E.
- Margin Sustainability: While SK hynix will likely maintain top market share and yield leadership, competitor entry makes rising competitive intensity inevitable. Whether HBM3’s high profitability can be sustained or expanded in HBM3E remains a key tracking point.
- OECD Leading Indicator: Having expanded for 17 consecutive months through March, the YoY growth rate has stalled and is moving sideways, signaling a potential peak-out.
📝 Editor’s Comment (Perspective)
The analyst adopts a cautious stance on SK hynix, viewing the company not merely through the lens of strong near-term earnings (1Q beat and 2Q OP projected at KRW 6.1 Trillion), but as facing critical structural headwinds from emerging HBM competition (Micron’s 8-high HBM3E entry and Samsung’s HBM3/HBM3E ramp) and potential cycle maturation in the OECD leading indicator. Greater significance is attached to multiple derating risks (trimming target P/B to 2.1x) and whether HBM profitability can be defended in an increasingly contested market rather than trailing quarter price increases.
To assess whether this investment thesis unfolds as anticipated, key verification points include achieving 2Q24 operating profit of KRW 6.1 Trillion, monitoring SK hynix’s HBM3E margin sustainability as Micron supplies 8-high and Samsung accelerates HBM3 shipments and 12-high qualifications, and tracking whether the OECD leading indicator growth rate rolls over into negative territory. 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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