Market: KOSPI (000660)
Brokerage : iM Hi Investment & Securities
Analyst : Myung-sub Song (IT RA Woo-sung Son)
Investment Rating : Hold (Maintained)
Target Price : KRW 217,000 (Downgraded)
Core Momentum : Downward revision of earnings forecasts and target price reflecting potential OECD leading indicator downturns, looming HBM oversupply risks from competitor entry, and set makers’ price resistance
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: Hold (Maintained) / Target Price: KRW 217,000 (Downgraded) / Closing Share Price (2024-07-25): KRW 190,000 (Upside potential: 14.2%) / Market Cap: KRW 138.32 Trillion
- Target Price Valuation Logic:
- Applied a Target P/B multiple of 2.30x (the average of annual peak P/B multiples during 2005–2012 when the highest historical valuation multiples were recorded) to the downwardly revised 2024E BPS of KRW 94,396, lowering the target price to KRW 217,000.
- Operating profit projections for 3Q24 and full-year 2024 revised down from previous estimates of KRW 8.6 Trillion and KRW 26.7 Trillion to KRW 7.2 Trillion and KRW 23.9 Trillion (table indicates KRW 23.863 Trillion), respectively.
- Financial Performance & Forecasts:
- 2023: Revenue KRW 32.766 Trillion, Operating Profit -KRW 7.730 Trillion, Net Profit -KRW 9.112 Trillion
- 2024(E): Revenue KRW 66.666 Trillion, Operating Profit KRW 23.863 Trillion, Net Profit KRW 15.943 Trillion
- 2025(E): Revenue KRW 74.132 Trillion, Operating Profit KRW 25.755 Trillion, Net Profit KRW 17.910 Trillion
- 2026(E): Revenue KRW 57.823 Trillion, Operating Profit KRW 10.177 Trillion, Net Profit KRW 6.501 Trillion
- Valuation Multiples (2023 → 2024E → 2025E → 2026E):
- EPS: -KRW 12,517 → KRW 21,899 → KRW 24,601 → KRW 8,930
- BPS: KRW 73,495 → KRW 94,396 → KRW 118,000 → KRW 125,933
- PER: N/A → 8.7x → 7.7x → 21.3x
- PBR: 1.9x → 2.0x → 1.6x → 1.5x
- EV/EBITDA: 21.2x → 4.2x → 3.5x → 5.1x
- ROE: -15.6% → 26.1% → 23.2% → 7.3%
- Dividend Yield: 0.2% → 0.2% → 0.2% → 0.2%
🚀 2. [Market Opportunities & Business Outlook]
- 2Q24 Earnings Review:
- Consolidated Results: Revenue posted KRW 16.4 Trillion and Operating Profit reached KRW 5.5 Trillion (beating previous revenue estimate of KRW 16.2 Trillion, but missing operating profit estimate of KRW 6.1 Trillion).
- Margin Analysis: While in line with market consensus, operating profit fell short of elevated market expectations (which peaked near KRW 7.0 Trillion). Results included KRW 300 Billion in inventory valuation reversals, but HBM3E margins were lower than HBM3 due to increased costs and lower initial yields.
- 3Q24 Outlook & Price Deceleration:
- Consolidated Forecast: Revenue projected at KRW 18.2 Trillion and Operating Profit at KRW 7.2 Trillion.
- Shipment & Pricing: Based on company shipment guidance (DRAM low-single-digit growth, NAND mid-single-digit drop) and ASP assumptions (DRAM +10%, NAND +9%).
- Client Resistance: Prior memory price increases are squeezing set makers’ profitability, leading to buyer resistance. NAND ASP growth will slow below DRAM as production cuts end and customer inventory restocking reaches maturity.
- Potential HBM Supply-Demand Deceleration:
- Assuming 100% CoWoS utilization across AI accelerators, total 2024 HBM demand is estimated at 880 million GB (supporting up to 9.32 million accelerators, including 4.73 million from Nvidia).
- In contrast, combined 2024 production plans across the three HBM makers total 1.38 billion GB, exceeding addressable demand.
- HBM market tightness is likely to ease once Samsung Electronics begins volume shipments of HBM3E to Nvidia.
📝 Editor’s Comment (Perspective)
The analyst adopts a cautious stance on SK hynix, viewing the company not through an unconstrained growth lens, but as facing critical macro and supply-side inflection points including a potential downturn in the OECD leading indicator, customer price pushback, and emerging HBM oversupply risks. Greater importance is attached to the supply-demand imbalance between total HBM manufacturer output plans (1.38 billion GB) and CoWoS-constrained demand (880 million GB) rather than near-term margin strength.
To assess whether this investment thesis unfolds as anticipated, key verification points include achieving the revised 3Q24 operating profit of KRW 7.2 Trillion, the timing and volume impact of Samsung Electronics’ HBM3E qualification at Nvidia, and whether the actual demand for AI accelerators matches the theoretical 880 million GB HBM limit. 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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