[Edaily Reporter kyoungeun kim ] On the 3rd, SANGSANGINVESTMENT&SECURITIES projected that SK hynix(000660)would report second-quarter earnings exceeding market expectations. The firm maintained its “Buy” rating and significantly raised its target price from 1.4 million won—set last April—to 3.8 million won.
Jeong Min-kyu, an analyst at SANGSANGINVESTMENT&SECURITIES, released a report titled “Numbers Louder Than Noise” that day, stating, “The target price is justified by reduced earnings volatility resulting from the expansion of long-term supply agreements (LTAs), a high-profit phase with a return on equity (ROE) exceeding 50%, and the elimination of the discount relative to global competitors following the listing of American Depositary Receipts (ADRs).”
The target price was calculated by applying a 12-month forward book value per share (BPS) of 710,954 won to a fair price-to-book ratio (PBR) of 5.3 times.
Analyst Jeong projected second-quarter revenue of 86.5 trillion won (up 289.0% year-over-year and 64.5% quarter-over-quarter) and operating profit of 66.2 trillion won (up 618.6% year-over-year and 76.0% quarter-over-quarter). These figures are slightly above the consensus estimate (63.8 trillion won as of the 2nd).
He explained, “DRAM revenue is expected to reach 69.1 trillion won (up 70.0% quarter-over-quarter), with operating profit at 54.7 trillion won (operating profit margin of 79.1%), as strong memory prices drive profits.” Regarding NAND, he added, “Amid strong demand for enterprise solid-state drives (eSSDs) for artificial intelligence (AI) storage and rising average selling prices due to suppliers’ conservative expansion stance, revenue is expected to reach 16.8 trillion won, with operating profit at 11.5 trillion won (operating profit margin of 68.2%).”
The firm expects this profit growth trend to continue into the second half of the year. Third-quarter operating profit is projected to reach 81.6 trillion won (a 23.3% increase from the previous quarter), continuing the upward trend, with full-year revenue forecast at 350.1 trillion won and operating profit at 275.7 trillion won (operating profit margin of 78.8%).
He noted, “In the second half, the expansion of High-Bandwidth Memory (HBM) volumes and further increases in contract prices for general-purpose DRAM and NAND will be the key drivers of upward revisions to earnings,” adding, “The 2027 HBM price negotiations will be a critical factor in determining the extent to which estimates can be further raised.” He added, “Other variables to watch include whether overseas capital inflows will continue following the American Depositary Receipt (ADR) listing and whether the valuation gap with North American competitors will narrow.”