SK Hynix's earnings outlook is being revised downward by analysts. However, the structural growth trend centered on high-bandwidth memory (HBM) and the ongoing supply shortage remain valid assessments.
On July 14, financial investment firm Mirae Asset Securities lowered its second-quarter operating profit forecast for SK Hynix from 70.7 trillion won to 62.3 trillion won, a 12% reduction. This adjustment reflects an 8% decrease in the projected average selling price (ASP) for DRAM and a 5% decrease for NAND.
Kim Young-geon, a researcher at Mirae Asset Securities, stated, "It appears that SK Hynix has secured about 50% of its sales through long-term supply contracts (LTA). This not only enhances earnings stability but also reduces exposure to speculative demand driven by procurement uncertainties."
The previous day, Korea Investment & Securities also revised its operating profit estimates for SK Hynix for this year and next year down by 9% and 11%, respectively. This adjustment reflects a more realistic outlook on memory prices based on the LTA contract structure.
Korea Investment & Securities forecasts SK Hynix's second-quarter operating profit to be 60.4 trillion won, which is 8% below the market consensus of 65 trillion won. They noted that the higher proportion of HBM sales compared to competitors could lead to a lower overall ASP increase than the market average.
However, analysts do not view this earnings adjustment as indicative of a downturn in the industry. They argue that the memory sector is shifting from a past focus on spot prices to a structure centered on 3-5 year long-term supply contracts, leading to a reassessment of corporate value based on the sustainability of higher profitability rather than short-term price increases.
Mirae Asset Securities projects SK Hynix's operating profit for 2027 to reach 389 trillion won, indicating a 45.7% increase year-on-year. They believe that rising HBM prices will drive production capacity allocation, tightening the supply of general memory further.
Target prices remain unchanged. Mirae Asset Securities maintains a target price of 4.2 million won, while Korea Investment & Securities sets it at 3.8 million won, keeping their investment ratings at 'Buy' and 'Overweight,' respectively.
* This article has been translated by AI.
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