Market: KOSPI (000660)
Brokerage : iM Securities
Analyst : Myeongsub Song
Investment Rating : Buy (Maintain)
Target Price : 1,160,000 KRW (Raised)
Core Momentum : Severe memory supply shortages are expected to drive record increases in legacy DRAM and NAND fixed transaction prices in Q1, with continued pricing gains through Q3 supporting extraordinary full-year earnings growth.
📊 1. [Valuation & Key Financial Metrics]
- Target Price: 1,160,000 KRW (Based on P/B 3.0x applied to FY26E BPS of 385,495 KRW)
- Investment Rating: Buy (Maintain)
- FY26E Financial Outlook: Revenue 258.51 trillion KRW, Operating Profit 198.80 trillion KRW, Net Income 159.63 trillion KRW
- EPS: 223,972 KRW (FY26E)
- Valuation Multiples: PER 3.8x, PBR 2.2x, EV/EBITDA 2.3x, ROE 81.7% (Based on FY26E)
🚀 2. [Market Opportunities & Business Outlook]
- 1Q26 Price Surges: Fixed transaction prices for Legacy DRAM and NAND negotiated post-February are expected to post the highest quarterly increase rates in history, with price uptrends likely persisting through at least 3Q26.
- Earnings Forecast: 1Q26 revenue is estimated at 53.9 trillion KRW (+64% QoQ) and operating profit at 40.0 trillion KRW (+108% QoQ).
- Long-Term Agreements (LTAs): While some clients are requesting up to 3-year long-term contracts, suppliers generally negotiate based on market pricing due to potential downside risks from sudden price shifts, underscoring severe DRAM supply shortages.
- Future Assumptions: Factoring in subsequent price gains of 10~15% in 2Q and 5% in 3Q following the 1Q spike, FY26 revenue and operating profit are projected to reach 258.5 trillion KRW and 198.8 trillion KRW (+321% YoY), respectively.
📝 Editor’s Comment (Perspective)
The analyst views SK hynix as an enterprise capturing extraordinary earnings expansion—projecting 40 trillion KRW in operating profit for the first quarter and 198.8 trillion KRW for the full year of FY26—driven by unprecedented price appreciation. The analyst emphasizes the powerful profitability leverage stemming from severe supply constraints.
To verify this investment thesis, one should track whether the actual fixed price increases in 1Q meet expectations, if subsequent price hikes in 2Q and 3Q materialize as assumed, and whether FY26 earnings estimates are successfully achieved amidst tight supply conditions. These indicators can be monitored through upcoming quarterly earnings reports and regulatory filings via DART.
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