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A new beginning

Memory chip supply/demand outlook

In 2024, we forecast PC, smartphone, and server shipments to climb 3.6%, 3%, and 2.1% YoY, respectively. We expect memory prices to rise rapidly, given the effects of supply cuts/reduced utilization in 2023 and a projected demand recovery in 1H24.

4Q23 and 2024 earnings forecasts

We expect SK Hynix to narrow its operating loss to W252bn in 4Q23 and swing to an operating profit of W10tr in 2024, slightly above market expectations. Profit growth should be driven by a recovery in the conventional DRAM market.

P/B could break above upper end of historical range

We maintain our Buy rating on SK Hynix and raise our target price by 15% to W173,000 (from W150,000), applying a target P/B of 2.0x (vs. 1.8x previously) to our 2024F BPS of W86,290.