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<Research> HSBC Research Lifts SK Hynix (000660.KS) TP to KRW2.9 million on Further DRAM Price Upside
Recommend 8 Positive 5 Negative 7 |
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HSBC Research issued a report expecting SK Hynix (000660.KS) to further benefit from strong pricing trends in server and mobile DRAM. It forecast 2Q26 operating profit to reach KRW65 trillion (up 73% QoQ and 606% YoY), 14% above its previous estimate, while revenue is projected at KRW80 trillion (up 52% QoQ and 260% YoY). The upward revision is mainly driven by a 40% QoQ increase in DRAM average selling prices (vs. prior forecast of 28%), reflecting: 1) stronger price hikes for server and mobile DRAM amid robust general server demand; 2) capacity shifts from PC to server, lifting PC DRAM prices; and 3) a rebound in HBM3e prices, narrowing the discount to PC DRAM. The broker expects 2026 operating profit to reach KRW265 trillion (up 460% YoY), 13% higher than its previous forecast, with revenue of KRW329 trillion (up 238% YoY). HSBC Research believes: 1) the current memory cycle resembles the mid-phase of the 199095 supercycle, when office automation triggered a six-year DRAM shortage; 2) AI is diversifying memory demand from HBM to SO-CAMM2 and ICMS to lower cost per token and promote AI adoption; and 3) with rising service fees and anticipated ROIC improvement, cloud service providers will continue to expand capital expenditure aggressively. As costs decline significantly and agentic AI enhances AI usage, leading AI service providers are likely to see margin expansion, making data center investment easier on improved ROIC expectations. The four major CSPs 2026 capital expenditure growth has risen to USD640 billion (up 70% YoY), compared with 60% before 1Q earnings releases. HSBC Research maintained a Buy rating on SK Hynix, raising its TP to KRW2.9 million (from KRW1.8 million). Under stronger DRAM price assumptions, it lifted its 20262028 operating profit forecasts by 13%/19%/21%, respectively. As the market begins to price in a longer and more stable earnings trajectory through 2028, the broker shifted its valuation reference period to the average BVPS for 20272028 (previously 2027). It raised the target PB multiple to 2.8x (from 2.4x), a historical high, reflecting ROE improvement and enhanced comparability with US peers following progress in ADR listing. Even at the new TP, the implied P/E is only 7x the average EPS for 2027/28. Its 20272028 operating profit forecasts are 9% to 13% above market consensus. (ad/j) Auto-translated by AI This article was automatically translated by AI, the original language version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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