Meritz Securities analyzed that SK hynix's profitability is improving explosively on the back of structural improvement in the memory industry and its lead in the high bandwidth memory (HBM) market. It maintained its "buy (BUY)" rating and raised its target price to 1.45 million won from 910,000 won. The previous trading day's closing price of SK hynix was 861,000 won.
Researcher Kim Seon-woo at Meritz Securities said in a report, "SK hynix's operating profit in the fourth quarter of 2025 was 19.2 trillion won, up 68% from the previous quarter and 137% from a year earlier, slightly beating market expectations."
Kim particularly noted, "Even though the fourth-quarter DRAM selling price increase slightly lagged the industry average, the DRAM operating margin approached 70%, and NAND also recorded a margin exceeding 20%," adding, "A product mix shift centered on HBM maximized profitability leverage."
On the memory industry, the assessment was that it has entered a phase of structural improvement. He analyzed, "The DRAM market is currently in a phase where competitive price increases are occurring amid limited supply expansion," and "with B2B demand expanding centered on AI data centers, the structure of memory demand is shifting from a past B2C focus to a step-change growth phase." HBM shipments are expected to post a high growth rate of about 70% in 2026 as well.
He also viewed positively the decision to maintain an appropriate level of capital expenditures. Kim said, "The company significantly raised its capital expenditure plan, but it reaffirmed an investment discipline to avoid aggressive capacity additions that would defy industry conditions."
He also gave a positive evaluation of the shareholder return policy. He said, "SK hynix made clear its commitment to shareholder returns by announcing the cancellation of all treasury shares held and an additional dividend of 1,500 won per share," adding, "It is understood to be reviewing various alternatives for more proactive shareholder returns, including issuing ADRs."
Meritz Securities projected that SK hynix's quarterly operating profit will set record highs in succession at 27.8 trillion won in the first quarter of 2026 and 35.6 trillion won in the second quarter. It estimated annual operating profit at 141 trillion won in 2026 and 164 trillion won in 2027.
Kim projected, "The current cycle is unfolding while buyers' inventory levels remain low, so there is a high possibility of the largest-ever supply-demand gap occurring by mid-2026," adding, "In the second to third quarters, a phase of surging double ordering may emerge, and this upcycle will likely continue until mid-next year."