Disclaimer: This article is for informational purposes only and does not constitute financial advice.
Investment Thesis and Target Price
Mirae Asset Securities maintains a Buy Investment Rating for SK Hynix but has lowered the Target Price by 33% to 2,800,000 KRW (~$1,924 USD based on 1455 KRW/USD) from the previous 4,200,000 KRW (~$2,887 USD). The valuation adjustment is primarily due to a reduction in the target multiple to 4.6x P/B (down from 6.5x), reflecting a general industry-wide price decline following concerns over China’s localization of lithography equipment. However, the brokerage believes the impact of these issues on earnings estimates through 2028 will be limited and views the recent price correction as excessive given the company’s strong fundamentals and financial stability.
Earnings Estimates and Financial Preview
Operating profit for 2Q26 is estimated at 62.3 trillion KRW (~$42.8B USD), representing a 65.7% increase Quarter-over-Quarter (QoQ). For the full year 2026F, operating profit is projected at 266.8 trillion KRW (~$183.3B USD), slightly below the market consensus of 270.6 trillion KRW (~$186.1B USD). Revenue for 2026F is estimated at 347.5 trillion KRW (~$238.8B USD). Regarding shareholder returns, the company expects a cumulative Free Cash Flow (FCF) of 440 trillion KRW (~$302.4B USD) through 2027. Including cash secured via ADR issuance and Kioxia investment recovery, net cash is estimated to reach 420 trillion KRW (~$288.7B USD) by the end of 2027, providing a 300 trillion KRW (~$206.2B USD) surplus over the target stable cash balance of 100 trillion KRW (~$68.7B USD).
Key Semiconductor Drivers and Outlook
The brokerage highlights several positive catalysts: Google Cloud’s increasing order backlog (growing from $468B to $514B) and DRAM (16Gb) spot prices exceeding previous peaks after 50 consecutive trading days of gains, signaling tight market conditions. While memory ASPs are expected to rise next year, the pace of increase is likely to moderate compared to this year. Key focus areas for the upcoming conference call include the progress of Long-Term Agreements (LTA), the potential for intensified memory shortages in 2027 compared to 2026, shipment trends and 2027 growth rates for High Bandwidth Memory (HBM) 4, the concretization of the Memory as a Service (MaaS) subscription model, and the possibility of early execution of shareholder returns.
🔗 Original Source: View the official filing/article here.