[Edaily Reporter Shin Ha-yeon ] On the 29th, NH INVESTMENT & SECURITIES assessed that SK hynix(000660)had alleviated market concerns regarding high-bandwidth memory (HBM) quality issues and long-term supply contracts through its strong third-quarter earnings. Noting that rising DRAM prices and expanding shipment volumes are occurring simultaneously, the firm stated that earnings visibility has improved thanks to long-term supply contracts, and maintained its “Buy” rating and target price of 3.4 million won.

Ryu Young-ho, an analyst at NH INVESTMENT & SECURITIES, stated in a report released that day, “We believe these third-quarter results have provided a sufficient response to the concerns the market had been raising,” adding, “Despite market noise, we are seeing clear evidence in the numbers that things are distinctly different from the past.”

SK hynix’s third-quarter revenue reached 104.6 trillion won, a 327.9% increase year-over-year. Operating profit rose 632.1% to 83.3 trillion won, significantly exceeding market expectations. The operating profit margin reached 79.7%.

The key drivers of this earnings improvement were rising DRAM prices and an increased share of high-value-added products. The average selling price (ASP) of DRAM in the third quarter is estimated to have risen 27.6% from the previous quarter, while shipment volume also increased by 9.4%. Although NAND flash shipments decreased by 1.0%, the 25.0% rise in ASP supported the earnings improvement.

Analyst Ryu explained, “Although NAND shipments fell short of expectations due to changes in the product mix, the rise in DRAM prices offset this,” adding, “In particular, the increase in the share of 1c and HBM4 drove the strong performance of DRAM ASPs.”

Concerns regarding HBM4 quality, which had been raised previously, are also said to have subsided. During its third-quarter earnings call, SK hynix announced that it had raised its target yield for HBM4, as actual yields exceeded initial projections. The company projected that HBM4 would surpass HBM3E in both bit shipments and revenue share in the fourth quarter.

The expansion of long-term supply agreements (LTAs) is also viewed positively. Contracts the company has already signed account for more than 50% of its total production capacity for 2027–2028. Analysts note that, when considering the volumes currently under discussion with customers, sales channels for DRAM and HBM are effectively secured through 2029.

Analyst Ryu stated, “Long-term supply agreements mean an expansion of our customer base and the securing of more than 50% of total production through 2028,” adding, “Considering the LTAs and the volumes currently under discussion with customers, sales channels are effectively secured through 2029.”

Further improvement in fourth-quarter earnings is also expected. NH INVESTMENT & SECURITIES projected SK hynix’s fourth-quarter revenue at 127.5 trillion won and operating profit at 102.7 trillion won. These figures represent year-over-year increases of 288.5% and 435.8%, respectively.

In particular, DRAM shipments are estimated to increase by 23.9% quarter-over-quarter. The analysis suggests that the transition to the 1c process and expanded production at M15X will drive this growth in shipments. With HBM4 volumes also expanding, they forecast that it will account for more than half of total HBM shipments.

Analyst Ryu stated, “We expect DRAM shipments in the fourth quarter to rise by 23.9%, exceeding market expectations,” adding, “Given the recent price increases, there is also a possibility of further upward revisions.”

The expansion of shareholder return policies was also cited as a factor enhancing investment appeal. The company plans to return most of the profits from its investment in Kioxia as special dividends, while funds for shareholder returns other than dividends will be used for share buybacks.

NH INVESTMENT & SECURITIES projected SK hynix’s annual operating profit at 284.2 trillion won this year and 483.7 trillion won next year. It expects next year’s operating profit to increase by 70.2% compared to this year.

Analyst Ryu emphasized, “We believe it is now time to focus on the structural changes in the memory industry.”