Why SK hynix Maintains Its 4 Million Won Target Price: "Earnings Beat FX Headwinds" [Click eStock]

SK Securities maintained its target price of 4 million won and its “Buy” rating on SK hynix on October 13, saying it expects earnings to exceed the headwind from the weaker exchange rate.

In a report released that day, SK Securities analyst Han Donghee said, “SK hynix’s third-quarter consolidated operating profit is expected to rise 31% from the previous quarter to 79 trillion won, about 7% above the market consensus.” He added, “Even after taking into account a 3% downward revision to our previous exchange-rate assumption, the strength of the memory market is still exceeding expectations.”

The main driver of strong earnings is a simultaneous rise in the prices of DRAM and NAND flash. By product, average selling prices (ASPs) in the third quarter are estimated to increase 26% quarter over quarter for DRAM and 16% for NAND flash, while shipment volumes are also expected to rise 9% for DRAM and 2% for NAND flash.

SK Securities forecast that SK hynix’s annual operating profit next year will increase 61% from the previous year to 435 trillion won. “Supply shortages are deepening amid strong demand for AI memory, and prices for commodity products are expected to remain strong as long-term supply agreements (LTAs) expand, while prices for high-bandwidth memory (HBM) are also expected to be strong,” Han said.

The stock is also considered a good buy from a valuation perspective. “Next year’s projected price-to-earnings ratio (P/E) is only around 3.7 times, while the company’s earnings power ranks among the highest globally,” Han said. “Taking into account the policy of returning more than 50% of cumulative free cash flow (FCF) from 2026 to 2028 to shareholders, the amount would equal 11% of the current market capitalization and approach 14% in 2028.”

This content was produced with the assistance of AI translation services.