Market: KOSPI (000660)
Brokerage : DS Investment & Securities
Analyst : Surim Lee
Investment Rating : BUY
Target Price : 1,300,000 KRW (Upgraded)
Core Momentum : Sustained contract-price increases and conventional DRAM supply shortages are expected to support strong earnings growth through 2027, while expanding LTAs provide price-floor protection and strengthen earnings visibility.
📊 1. [Valuation & Key Financial Metrics]
- Target Price / Investment Rating: 1,300,000 KRW / BUY
- Current Price (as of 04/08): 1,033,000 KRW (Upside potential: 25.8%)
- Market Capitalization: 736,222 billion KRW (Common stock)
- Key Financial Metrics (2025A / 2026F / 2027F):
- Revenue: 97,147 billion KRW / 302,296 billion KRW / 393,424 billion KRW
- Operating Profit: 47,206 billion KRW / 211,577 billion KRW / 282,213 billion KRW
- Operating Margin: 48.6% / 70.0% / 71.7%
- Net Income Attributable to Controlling Interests: 37,427 billion KRW / 171,733 billion KRW / 229,338 billion KRW
- EPS: 51,410 KRW / 235,897 KRW / 315,023 KRW
- ROE: 41.0% / 88.7% / 58.4%
- PER: 10.1x / 4.4x / 3.3x
- PBR: 3.5x / 2.7x / 1.5x
- EV/EBITDA: 6.1x / 2.6x / 1.3x
🚀 2. [Market Opportunities & Business Outlook]
- 1Q26 Earnings Outlook: Projected operating profit for Q1 has been revised upward to 39 trillion KRW (+104% QoQ, OPM 67%). DRAM ASP is estimated to rise 75% QoQ and NAND ASP by 55% QoQ, with bit growth (B/G) estimated at 5% and 3% respectively. Driven by a high proportion of server DRAM, DRAM operating margin is estimated at 76%, while NAND operating margin is projected at 39%.
- Annual Earnings Forecast Upgrades: Full-year DRAM and NAND ASPs are projected to surge by 163% and 138% respectively this year, prompting an upward revision of the 2026 operating profit estimate to 211 trillion KRW (+348% YoY, OPM 70%). Operating profit for 2027 is revised upward to 282 trillion KRW (+33% YoY, OPM 72%).
- Sustained Memory Contract Price Increases: Actual profitability and earnings in the memory market are determined by contract prices rather than spot prices. With price-hike cycles expected to persist through 4Q26 based on memory maker ASPs, industry conditions and earnings trajectories remain highly favorable. Current premiums of DRAM spot prices over contract prices stand at 60-70% for DDR5 and 70-90% for DDR4, implying continuous upward pressure on contract prices even during spot price pullbacks.
- LTA Expansion and Supply-Demand Outlook: Expanding long-term agreements (LTAs) will serve to limit the speed and magnitude of future price declines through quarterly negotiations, price floor settings, and volume securing via prepayments. Given industry-wide capacity outlooks, conventional DRAM supply shortages are expected to persist through the end of 2027. Short-term supply-demand benefits are also anticipated from broadened accessibility for global investors upon an ADR listing in the second half.
📝 Editor’s Comment (Perspective)
The analyst evaluates that contract prices—rather than spot prices—drive the memory market, and with price-hike cycles extending through 4Q26, the expansion of LTAs and supply shortages are working together to limit downside price risks and enhance earnings visibility. This perspective places greater emphasis on contract price-backed financial robustness and conventional DRAM supply deficits extending through 2027 rather than short-term price fluctuations.
To determine whether this investment thesis is unfolding as projected, key items to monitor include the delivery of the projected 39 trillion KRW operating profit for Q1, whether surging DRAM and NAND ASPs translate into full-year earnings forecasts (2026 operating profit of 211 trillion KRW), and whether LTA expansion secures downside price rigidity alongside the persistence of conventional DRAM supply shortages through 2027. These developments can be tracked through upcoming quarterly and annual earnings releases, official corporate IR materials, and regulatory disclosures via DART/KRX.
📢 Disclaimer & Source
Source: This content has been structured and newly written based on officially disclosed financial facts and data from brokerage reports.
Investment Risk Notice: This content is provided for informational and linguistic reference purposes only. Under no circumstances does it constitute financial advice or a recommendation to buy or sell any specific securities. All investment decisions and financial responsibilities rest entirely with the investor.
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