Korea Investment & Securities Co. said on the 24th that SK hynix's first-quarter results met expectations and that earnings momentum will continue for a considerable period thanks to structural growth in memory demand.

It kept its investment rating at "Buy" and raised its target price to 2.05 million won from 1.8 million won. This is the highest target price for SK hynix presented by the securities industry so far. SK hynix closed the previous trading day at 1.223 million won.

SK hynix surpasses 37 trillion won in first-quarter operating profit this year, achieving its best results ever. On the 23rd, SK hynix reports first-quarter sales and operating profit of 52 trillion 5,763 billion won and 37 trillion 6,103 billion won, respectively. Both revenue and operating profit set quarterly records, outpacing big techs such as Taiwan TSMC and US Nvidia, which boast the world's highest profitability. The photo shows SK hynix headquarters in Icheon, Gyeonggi Province, today./Courtesy of News1

Chae Min-suk, an analyst at Korea Investment & Securities Co., said, "Investment is set to increase sharply from a year earlier, but as memory demand expands structurally, supply shortages will persist for the time being," adding, "While major customers' memory demand is increasing across the board for both DRAM and NAND, it is difficult to ramp up supply in the short term, so the upcycle in memory prices is likely to last longer than in the past."

Chae added, "As long-term agreements (LTA) expand, the predictability of demand and the profitability of investment will improve, and the volatility that has recurred in the memory industry in the past could narrow, improving the market's assessment."

SK hynix disclosed the previous day that it posted first-quarter revenue of 5.26 trillion won and operating profit of 3.76 trillion won this year. Revenue jumped 198% from a year earlier, once again setting a quarterly revenue record. Operating profit surged 405% from a year earlier.

Average selling prices (ASP) for DRAM and NAND rose by the mid-60% and mid-70% from the previous quarter, respectively, driving strong results. The gross margin was 79%, and the operating margin was 72%, up 10% and 13% points from the previous quarter, respectively.

Korea Investment & Securities Co. raised its estimates for SK hynix's annual operating profit this year and next to 25.1 trillion won and 36.1 trillion won, up 16% and 30% from prior estimates, respectively.

Chae said, "With structural changes in demand, SK hynix's earnings momentum will continue for a considerable period," adding, "It is far too early to declare the end of the memory upcycle."

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