Market: KOSPI (000660)
Brokerage : SK Securities
Analyst : Dong-hee Han (R.A Jemin Park)
Investment Rating : BUY (Maintained)
Target Price : KRW 300,000 (Downgraded)
Core Momentum : Sustained 2H earnings growth cycle powered by expanding shipments of 8-high HBM3e, e-SSD mix enhancements, and elevated underlying profitability despite macroeconomic estimate revisions
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY (Maintained) / Target Price: KRW 300,000 (Downgraded) / Base Share Price (2024-10-02): KRW 169,100 (Upside potential: 77.4%)
- Target Price Valuation Logic:
- 2025 operating profit forecast revised down by 14% to KRW 35.0 Trillion (table reflects KRW 34.60 Trillion) due to slow set recovery and a short-term memory cycle deceleration, leading to a target price cut to KRW 300,000.
- Trading at 1.36x 12M Fwd. P/B (historical mid-band), negative impacts from sluggish conventional set demand on memory earnings are deemed excessively exaggerated given strong HBM, DDR5, and e-SSD dynamics.
- Financial Performance & Forecasts:
- 2021: Revenue KRW 42.998 Trillion, Operating Profit KRW 12.410 Trillion, Net Profit (Controlling) KRW 9.602 Trillion
- 2022: Revenue KRW 44.622 Trillion, Operating Profit KRW 6.809 Trillion, Net Profit (Controlling) KRW 2.230 Trillion
- 2023: Revenue KRW 32.766 Trillion, Operating Profit -KRW 7.730 Trillion, Net Profit (Controlling) -KRW 9.112 Trillion
- 2024(E): Revenue KRW 67.667 Trillion, Operating Profit KRW 23.052 Trillion, Net Profit (Controlling) KRW 16.181 Trillion
- 2025(E): Revenue KRW 86.872 Trillion, Operating Profit KRW 34.600 Trillion, Net Profit (Controlling) KRW 25.888 Trillion
- 2026(E): Revenue KRW 103.377 Trillion, Operating Profit KRW 47.140 Trillion, Net Profit (Controlling) KRW 35.985 Trillion
- Valuation Multiples (2021 → 2022 → 2023 → 2024E → 2025E → 2026E):
- EPS: KRW 13,190 → KRW 3,063 → -KRW 12,517 → KRW 22,226 → KRW 35,560 → KRW 49,430
- PER: 9.9x → 24.5x → -11.3x → 7.6x → 4.8x → 3.4x
- PBR: 1.5x → 0.8x → 1.8x → 1.7x → 1.3x → 0.9x
- EV/EBITDA: 4.6x → 3.5x → 21.5x → 3.9x → 2.4x → 1.4x
- ROE: 16.8% → 3.6% → -15.6% → 26.3% → 31.6% → 32.1%
🚀 2. [Market Opportunities & Business Outlook]
- 3Q24 Earnings Outlook:
- Consolidated Results: Operating profit projected at KRW 7.0 Trillion (+24% QoQ), slightly topping market consensus and setting a new all-time quarterly high.
- DRAM: Bit Growth +1%, ASP +17%. Driven by 8-high HBM3e shipment growth, DRAM ASP will show the strongest outperformance in the industry, lifting HBM’s share above 30% of DRAM revenue.
- NAND: Bit Growth -8%, ASP +7%. Supported by sustained high-density e-SSD demand.
- 4Q24 Outlook:
- Earnings expansion will continue, supported by expanding HBM shipments, premium mix improvements, and higher utilization at Solidigm driven by e-SSD strength.
- Post-Deceleration Rebound & Elevated Earnings Power:
- Despite near-term inventory adjustments in legacy sets, downside is protected by ① a low baseline in demand, ② conservative 2025 legacy CapEx across the industry, ③ advanced node capacity constraints due to strong HBM allocation, and ④ expanding premium product mix.
- The current cycle represents a brief pause followed by a rebound rather than the termination of the memory upcycle.
📝 Editor’s Comment (Perspective)
The analyst views SK hynix not as a commoditized memory manufacturer vulnerable to conventional set demand slowdowns, but as a premium AI memory leader capable of securing industry-leading ASP gains and structurally elevated profitability through dominant mixes of 8-high HBM3e and enterprise SSDs. Greater weight is attached to 2H earnings momentum and structural supply discipline in leading-edge nodes rather than short-term target price cuts driven by temporary macroeconomic headwinds.
To assess whether this investment thesis unfolds as anticipated, key verification points include whether HBM exceeds 30% of DRAM revenue alongside record 3Q24 operating profit, the sustainability of Solidigm’s utilization recovery and e-SSD margins in 4Q24, and whether supply discipline translates into a prompt earnings rebound following near-term legacy inventory adjustments. 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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