Korea Investment & Securities Co. on the 8th said average selling prices (ASP) for DRAM and NAND continue to rise and are expected to drive earnings growth for SK hynix. It raised its target price to 1.8 million won from 1.5 million won and maintained a "buy" rating. The previous trading day's closing price for SK hynix was 916,000 won.
Korea Investment & Securities Co. estimated SK hynix's first-quarter revenue and operating profit this year at 5.54 trillion won and 3.85 trillion won, up 214% and 417% from a year earlier. Operating profit is seen beating the market consensus of 3.2 trillion won by 20%.
Chae Min-suk, an analyst at Korea Investment & Securities Co., said, "The blended ASP for DRAM and NAND rose 65% and 78%, respectively, boosting solid results," and explained, "As server DRAM ASP led gains in conventional DRAM prices, the DRAM operating margin will come in at 75.4%, up 10.4 percentage points from the previous quarter."
Reflecting the first-quarter price increases, Chae revised this year's DRAM ASP growth to 127% from 104% and NAND to 153% from 97%. Reflecting this, the estimate for this year's operating profit was also raised to 21.6 trillion won, up 28% from the previous 16.8 trillion won.
Chae said, "This year's estimated operating margin for NAND is 61%, the highest since 2005." Starting in the second quarter this year, NAND's operating margin is expected to exceed that of high bandwidth memory (HBM).
She added, "Due to long-term supply contracts, ASPs at record highs will support the medium- to long-term downside, elevating profit levels and reducing profit volatility," and said, "Share-price pullbacks stemming from the Middle East situation are buying opportunities."