Leading brokerage KB Securities has significantly increased its target price for semiconductor giant SK Hynix, raising it to 1.9 million won ($1,400) per share from the previous 1.7 million won. This upward revision reflects the accelerating earnings growth expected from SK Hynix, primarily fueled by robust AI-driven memory demand and a strong uptrend in chip prices.
Maintaining a steadfast ‘buy’ rating, KB Securities anticipates SK Hynix’s operating profit will enter a more rapid growth phase post-first quarter. This positive outlook is underpinned by persistent supply shortages, which are projected to drive structural price increases across both DRAM and NAND memory segments.
Forecasting an impressive trajectory, KB Securities estimates SK Hynix’s annual operating profit could surge fivefold year-over-year to a remarkable 251 trillion won this year. The firm projects even further expansion, reaching 358 trillion won by 2027, a performance that could elevate SK Hynix into the elite tier of global corporate earners.
Breaking down the forecast by memory segment, DRAM operating profit is specifically projected to experience a fivefold increase, reaching 203 trillion won. Concurrently, NAND profit is anticipated to achieve an extraordinary 23-fold rise to 47 trillion won, indicative of significant price appreciation. The report details a projected 170 percent surge in DRAM prices this year, complemented by a substantial 190 percent increase in NAND prices.
Furthermore, SK Hynix’s first-quarter earnings are poised to surpass market expectations, with an operating profit forecast of 40.1 trillion won, representing an impressive 438.7 percent year-on-year increase.
KB Securities highlights that memory chips are increasingly recognized as critical infrastructure for leading technology companies, particularly amidst the accelerating global investment in Artificial Intelligence (AI). The firm notes a significant industry evolution towards a foundry-like operational model, characterized by stable, long-term supply contracts.
Despite this robust and positive outlook, SK Hynix’s valuation suggests it remains significantly undervalued. The stock is currently trading at a forward price-to-earnings (P/E) ratio of approximately 3.1, indicating considerable potential for a significant rerating in the market.
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