SK hynix(000660)'s estimates for operating profit for this year and 2027 will be revised down, according to a securities outlook on the 13th. It also said second-quarter operating profit will fall short of the consensus (the market's average forecast).

As SK hynix debuts on Nasdaq through an American Depositary Receipt (ADR) listing, the KOSPI and SK hynix share prices are displayed in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul, on the 13th. As of 9:03 a.m., the KOSPI is up 35.74 points (0.48%) at 7,511.68. /Courtesy of Yonhap News Agency

Korea Investment & Securities Co. issued a report that day and forecast SK hynix's second-quarter results at 80.9 trillion won in revenue and 60.4 trillion won in operating profit. Those are up 264% and 556%, respectively, from a year earlier.

However, it projected operating profit will miss the 65 trillion won consensus by 8%.

Chae Min-suk, an analyst at Korea Investment & Securities Co., said, "Because the share of high bandwidth memory (HBM) in sales is higher than competitors, the average selling price (ASP) increase is lower than the market average," and added, "From the third quarter, when HBM4 begins full-scale mass production and sales, the ASP increase will be in line with the market average."

Korea Investment & Securities Co. estimated that second-quarter DRAM and NAND ASPs rose about 30% and 50%, respectively, from the previous quarter.

It also revised down operating profit estimates for this year and 2027 by 9% and 11%, respectively, from prior figures. Chae said, "This is not about earnings concerns but the result of making price assumptions more realistic based on signed long-term agreements (LTA)," and noted, "As the memory industry shifts to a 3–5 year LTA contract structure, corporations' value will be determined by how long higher profitability persists rather than by quarterly ASP growth rates."

SK hynix's companywide operating margin is expected to hit a record high of 74.6% in the second quarter of this year and then continue to rise steadily each quarter.

Chae said, "What needs attention from now is the sustainability of revenue," adding, "The expansion of LTAs is reducing the earnings volatility that has long been a weakness of the memory industry."

It viewed that as the share of contract-based sales expands and supply shortages persist due to capacity (Capa) encroachment from increased HBM production, high profitability will be maintained for a long period.

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