[Edaily Reporter Park Jung-Soo ] On the 31st, LS SECURITIES lowered its target price for SK hynix(000660)by 27.3% from 3.3 million won to 2.4 million won, reflecting the normalization of competition among suppliers and an adjustment to HBM profitability forecasts, while maintaining a positive outlook on high-bandwidth memory (HBM) growth. The firm maintained its “Buy” rating. The closing price on the 28th was 1,653,000 won.
Jeong WOOSUNG, an analyst at LS SECURITIES, explained, “We maintain a positive view on SK hynix’s HBM shipment growth and medium- to long-term demand,” but added, “If competitors expand their HBM4 shipments and demonstrate improved mass-production capabilities, the likelihood of major customers diversifying their supply chains is expected to increase.”
He continued, “This represents a normalization of the competitive landscape among suppliers rather than a slowdown in the growth of the HBM market itself,” adding, “The key determinant of future stock prices will depend not on absolute HBM demand, but on the company’s ability to maintain its technological edge in next-generation products and a high market share among its clients.”
LS SECURITIES, in particular, lowered its 2027 HBM operating profit margin forecast from the previous estimate of approximately 80% to around 60%. Analyst Jeong stated, “Based on a recent industry review, we assess that the 2027 HBM operating profit margin will remain at approximately 60%, similar to 2026,” and “If the HBM operating profit margin rises to 80%, NVIDIA would have to raise product prices further to maintain a gross profit margin (GPM) of around 75%, which could constrain Big Tech server budgets—already under pressure from rising memory prices—and limit the expansion of the conventional DRAM market,” he analyzed.
Accordingly, the firm judged an HBM operating profit margin of around 60% to be the “Goldilocks” level that satisfies customers, memory suppliers, and the sustainability of artificial intelligence (AI) investment. However, it left open the possibility that HBM profit margins could rise again in the future due to cost reductions resulting from yield improvements.
He emphasized that the target price revision was not based on the premise of slowing HBM demand or a peak in the memory market. Analyst Jeong stated, “The core of this adjustment is not a slowdown in HBM demand or the end of the memory cycle, but rather a downward revision of earnings forecasts to reflect that the previously assumed excess profitability of HBM in 2027 will not materialize,” adding, “We also factored in the possibility that the premium resulting from supplier concentration may ease somewhat following SamsungElectronics’ entry into HBM4.”
The outlook for earnings growth remains robust. LS SECURITIES estimates SK hynix’s revenue for this year at 355.2 trillion won and operating profit at 266.3 trillion won. It forecasts that next year’s revenue will increase to 610 trillion won and operating profit to 465.8 trillion won.
Analyst Jeong stated, “We propose a price-to-book ratio (PBR) of 1.1 to 1.4 times, based on controlling shareholders’ equity, as the baseline trading range for 2028,” adding, “If the expansion of new AI demand sources and further yield improvements in next-generation HBM are confirmed, the upper limit could extend to 1.6 times.”