Market: KOSPI (000660)
Brokerage : Mirae Asset Securities
Analyst : Young-gun Kim
Investment Rating : BUY (Maintained)
Target Price : KRW 220,000 (Upgraded)
Core Momentum : Substantial upgrades to 2024/2025 operating profit forecasts driven by conventional DRAM supply tightness from HBM capacity absorption, alongside Solidigm’s surging AI-driven E-SSD demand
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY (Maintained) / Target Price: KRW 220,000 (Upgraded by 10% from KRW 200,000) / Base Share Price (2024-04-25): KRW 170,600 (Upside potential: 29.0%) / Market Cap: KRW 124.20 Trillion
- Target Price Valuation Logic:
- Full-year operating profit forecasts for 2024 and 2025 revised upward by 43% and 18% respectively.
- Target valuation multiple raised from 2.0x to 2.2x P/B.
- Projecting full-year operating profits of KRW 16.5 Trillion (table indicates KRW 16.459 Trillion) in 2024 and KRW 24.1 Trillion (table indicates KRW 24.122 Trillion) in 2025, anticipating a sustained multi-year profit expansion cycle through 2025.
- Financial Performance & Forecasts:
- 2022: Revenue KRW 44.62 Trillion, Operating Profit KRW 6.81 Trillion, Net Profit KRW 2.23 Trillion
- 2023: Revenue KRW 32.77 Trillion, Operating Profit -KRW 7.73 Trillion, Net Profit -KRW 9.11 Trillion
- 2024(F): Revenue KRW 61.45 Trillion, Operating Profit KRW 16.46 Trillion (KRW 16.5 Trillion in text), Net Profit KRW 11.85 Trillion
- 2025(F): Revenue KRW 80.78 Trillion, Operating Profit KRW 24.12 Trillion (KRW 24.1 Trillion in text), Net Profit KRW 18.01 Trillion
- 2026(F): Revenue KRW 94.09 Trillion, Operating Profit KRW 26.30 Trillion, Net Profit KRW 19.98 Trillion
- Valuation Multiples (2022 → 2023 → 2024F → 2025F → 2026F):
- EPS: KRW 3,063 → -KRW 12,517 → KRW 16,280 → KRW 24,740 → KRW 27,446
- P/E: 24.5x → – → 10.5x → 6.9x → 6.2x
- P/B: 0.8x → 1.8x → 1.9x → 1.5x → 1.2x
- ROE: 3.6% → -15.6% → 20.1% → 24.6% → 21.9%
- Operating Margin: 15.3% → -23.6% → 26.8% → 29.9% → 28.0%
- Dividend Yield: 1.6% → 0.8% → 0.7% → 0.7% → 0.7%
🚀 2. [Market Opportunities & Business Outlook]
- 1Q24 Earnings Review:
- Consolidated Results: Revenue posted KRW 12.4 Trillion (+9.9% QoQ) and Operating Profit reached KRW 2.9 Trillion (+730% QoQ).
- Key Drivers: Strong rebound in enterprise SSD (E-SSD) demand amid broad memory price increases, supported by ~KRW 0.9 Trillion in inventory valuation allowance reversals (predominantly in NAND).
- Memory Market Supply-Demand Dynamics:
- DRAM Dynamics: 2024 demand bit growth projected at +16.9% YoY. Out of the 276K wafer additions (average base including utilization), ~190K is dedicated to HBM (SEC +80K, SKH +90K, MU +20K). Deducting the ~90K wafer capacity needed to produce HBM leaves conventional DDR DRAM capacity growth at merely ~10% YoY, sustaining second-half price appreciation.
- NAND Dynamics: 2024 demand bit growth raised to +16.5% (+2.4%pt MoM revision), driven by a +10.4% MoM surge in AI-driven enterprise SSD demand projections. Solidigm is the sole supplier with upwardly revised capacity (+11.9%), positioned to absorb the majority of incremental E-SSD demand.
- Solidigm Turnaround & QLC Competitive Edge:
- Following post-acquisition headwinds from cyclical downturns and geopolitical tensions since 2021, Solidigm is entering a dramatic recovery phase driven by AI storage demand.
- As the sole supplier utilizing Floating Gate technology (highly advantageous for QLC architecture), Solidigm is capable of responding faster than competitors to North American customer sample requests for 60TB+ high-capacity SSDs.
📝 Editor’s Comment (Perspective)
The analyst views SK hynix not only as an established leader in HBM-driven DRAM premiums, but as a dual-engine beneficiary capturing substantial profit leverage from Solidigm’s dramatic operational recovery via Floating Gate QLC enterprise SSD leadership. Greater significance is attached to constrained conventional DDR DRAM supply (+10% YoY growth) resulting from HBM wafer absorption and Solidigm’s unique capability to fulfill North American 60TB+ E-SSD demand, supporting upgraded operating profits of KRW 16.5 Trillion in 2024 and KRW 24.1 Trillion in 2025.
To assess whether this investment thesis unfolds as anticipated, key verification points include sustaining conventional DDR DRAM price increases under tight supply constraints, the qualification-to-order progress of Solidigm’s 60TB+ high-capacity SSD samples for North American hyperscalers alongside its +11.9% capacity expansion, and tracking full-year operating profit trajectories toward KRW 16.5 Trillion in 2024 and KRW 24.1 Trillion in 2025. 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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