Market: KOSPI (000660)
Brokerage : Yuanta Securities Korea
Analyst : Gil-hyun Baik (Semiconductor, USCPA)
Investment Rating : BUY (Maintained)
Target Price : KRW 230,000 (Upgraded)
Core Momentum : 1Q24 earnings beat with NAND returning to operating profit after 6 quarters, expanding moat in Customized Memory driven by 2H24 ASIC market growth and 7th-gen HBM transitions
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: BUY (Maintained) / Target Price: KRW 230,000 (Upgraded) / Base Share Price (2024-04-25): KRW 170,600 (Upside potential: 35%) / Market Cap: KRW 124.20 Trillion / Dividend Yield: 0.85%
- Valuation Assessment & Investment Thesis:
- Upgraded target price to KRW 230,000 reflecting 1Q24 beat, expanding 2Q24 profitability, and accelerating tailwinds from the high-growth ASIC/Customized Memory market from 2H24 onward.
- Financial Performance & Forecasts:
- 2022A: Revenue KRW 44.62 Trillion, Operating Profit KRW 6.81 Trillion, Controlling Net Profit KRW 2.23 Trillion
- 2023A: Revenue KRW 32.77 Trillion, Operating Profit -KRW 7.73 Trillion, Controlling Net Profit -KRW 9.11 Trillion
- 2024F: Revenue KRW 66.55 Trillion, Operating Profit KRW 19.90 Trillion, Controlling Net Profit KRW 16.35 Trillion
- 2025F: Revenue KRW 86.21 Trillion, Operating Profit KRW 32.97 Trillion, Controlling Net Profit KRW 24.01 Trillion
- Valuation Multiples (2022A → 2023A → 2024F → 2025F):
- PER: 33.3x → -8.6x → 7.6x → 5.2x
- PBR: 1.1x → 1.4x → 1.7x → 1.3x
- EV/EBITDA: 4.4x → 17.5x → 4.1x → 2.5x
- ROE: 3.6% → -15.6% → 26.8% → 30.2%
🚀 2. [Market Opportunities & Business Outlook]
- 1Q24 Earnings Review (NAND Turnaround & Consensus Beat):
- Consolidated Results: Revenue posted KRW 12.43 Trillion (+144.3% YoY, +9.9% QoQ) and Operating Profit reached KRW 2.89 Trillion (turning profitable YoY, +736.2% QoQ, OPM 23.3%), substantially topping consensus (Operating Profit KRW 1.86 Trillion, a +56.0% beat).
- DRAM Division: Revenue recorded KRW 7.5 Trillion (+153% YoY, +2% QoQ) and Operating Profit reached KRW 2.3 Trillion (OPM 31%, +59% YoY, +80% QoQ), driven by solid demand for HBM/DDR5, customer build-up demand, and proactive response to high-capacity mobile/server segments (ASP +21% QoQ, Bit Shipments -15% QoQ).
- NAND Division (incl. Solidigm): Revenue reached KRW 4.4 Trillion (+158% YoY, +32% QoQ) and Operating Profit turned profitable at KRW 0.7 Trillion (OPM 16%), achieving operating profitability after 6 quarters due to broad production cut effects and eSSD-driven demand recovery (ASP +32% QoQ, Bit Shipments Flat QoQ).
- 2Q24 Earnings Outlook:
- Consolidated Forecast: Operating profit projected at KRW 4.4 Trillion (OPM 29%, turning profitable YoY, +51% QoQ).
- DRAM Segment: Operating profit projected at KRW 3.5 Trillion (OPM 36%, +49% QoQ) / ASP +12% QoQ, Bit Shipments +16% QoQ.
- NAND Segment: Operating profit projected at KRW 0.9 Trillion (OPM 19%, +41% QoQ) / ASP +14% QoQ, Bit Shipments +2% QoQ.
- Structural Competitiveness in Customized Memory:
- The 5% post-earnings conference call share price drop on April 25 is deemed an overreaction to end-demand recovery concerns.
- Rapid growth in the Customized Chip (including ASIC) market from 2H24 onward will directly drive demand for high-value customized memory including HBM.
- As the ASIC market expands, structural benefits are expected to intensify starting from 7th-generation HBM, reinforcing SK hynix’s secular leadership in Customized Memory.
📝 Editor’s Comment (Perspective)
The analyst views SK hynix not as a commoditized supplier subject to post-conference-call sentiment dips regarding 2H24 IT demand, but as a premier AI memory powerhouse that validated its core operational leverage through an early NAND turnaround (KRW 0.7 Trillion OP) and sustained HBM/DDR5 profitability. Greater significance is attached to secular leadership in Customized Memory driven by the emergence of the ASIC market and upcoming 7th-generation HBM transitions, alongside 2025 operating profit visibility reaching KRW 32.97 Trillion.
To assess whether this investment thesis unfolds as anticipated, key verification points include achieving 2Q24 consolidated operating profit of KRW 4.4 Trillion (DRAM KRW 3.5 Trillion, NAND KRW 0.9 Trillion), sustaining double-digit operating margins in NAND backed by enterprise SSD demand, and tracking customer ASIC co-development projects translating into firm 7th-gen HBM demand. These developments can be verified through future quarterly earnings releases, official company IR materials, DART/KRX filings, and regular financial statements.
📢 Disclaimer & Source
Source: This content has been structured and newly written based on officially disclosed financial facts and data from brokerage reports.
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