Disclaimer: This article is for informational purposes only and does not constitute financial advice.
📌 Key Research Highlights
- Broker: iM Securities | Rating: Buy (Initiation)
- Target Price: 2,300,000 KRW (~$1,696 USD based on 1356 KRW/USD)
- Core Thesis: Current stock price decline is excessive; HBM business value alone is projected to exceed the total market capitalization by 2028.
- Valuation: Target Price based on 2.3x Target P/B applied to 2027E BPS.
Investment Thesis and Target Price
iM Securities initiates coverage on SK Hynix with a Buy rating and a Target Price of 2,300,000 KRW (~$1,696 USD based on 1356 KRW/USD). The valuation is derived by applying a Target P/B of 2.3x to the 2027E Book Value Per Share (BPS), which represents the +2 standard deviation (SD) of the company’s average P/B since listing.
The analyst notes that the stock has fallen 57% from its June 2026 peak to its October low, exceeding the historical downcycle average decline of -51%. If the market shifts its focus to 2028 earnings sustainability, the Target Price could potentially expand to 3,600,000 KRW (~$2,655 USD based on 1356 KRW/USD) based on 2028E BPS.
Earnings Estimates and Financial Preview
The report forecasts explosive growth in revenue and operating profit through 2028, with ROE remaining significantly higher than previous upcycle peaks even after the 2026 peak.
| Metric (Unit: Billion KRW) | 2025 | 2026E | 2027E | 2028E |
|---|---|---|---|---|
| Revenue | 97,147 (~$71.6B USD) | 364,370 (~$268.7B USD) | 571,665 (~$421.6B USD) | 732,395 (~$539.9B USD) |
| Operating Profit | 47,206 (~$34.8B USD) | 283,745 (~$209.2B USD) | 452,846 (~$334.0B USD) | 541,959 (~$399.7B USD) |
| Net Income | 42,919 (~$31.6B USD) | 256,666 (~$189.2B USD) | 362,665 (~$267.4B USD) | 424,468 (~$313.1B USD) |
ROE Forecasts: 2026E: 102%, 2027E: 66%, 2028E: 47%.
Key Semiconductor Drivers and Catalysts
- HBM Value Dominance: HBM revenue is projected to grow from 43 trillion KRW (~$31.7B USD) in 2026 to 183 trillion KRW (~$134.9B USD) by 2028. Applying TSMC’s historical P/E multiples, the value of the HBM business alone is estimated to represent 47% of current market cap in 2026, 93% in 2027, and 135% in 2028.
- Shift to Custom HBM (cHBM): The transition toward customer-specific, build-to-order products is reducing volatility by eliminating spot market exposure and distribution inventory.
- Aggressive Shareholder Returns: The company is expected to return 50% of Free Cash Flow (FCF), with 70% of that allocated to treasury stock buybacks and cancellations. If the current price level (~1.5 million KRW) persists, the analyst estimates the number of shares could be reduced by 50% by 2030, effectively doubling the EPS.
- LTA Stability: Stress tests suggest that Long-Term Agreement (LTA) cancellations would only be incentivized if prices dropped by over 60% from peaks, providing a significant safety buffer for earnings.
🔗 Original Source: View the official filing/article here.