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Poised to deliver industry-leading profitability

Valuation burden easing amid sector-wide upward earnings forecast revisions

We maintain our Buy rating on SK Hynix and raise our target price by 12% to W1,540,000 (from W1,370,000). We revised up our 2026 operating profit forecast by 25% to W185tr while leaving our target P/B unchanged. Memory price momentum is proving stronger than previously expected, and we expect this strength to continue into 2H26. Accordingly, we increased our 2026 DRAM and NAND ASP growth estimates by 31%p and 70%p, respectively.

Our target multiple of 4.1x is based on the average 2026F P/B of global memory peers (excluding SanDisk). While global memory stocks have recently rallied, earnings forecasts have been raised in tandem, easing valuation concerns. We believe that applying the peer average multiple is sufficiently supported by fundamentals, with SK Hynix likely to deliver the highest 2026F ROE in the sector (estimated at 80.9%; vs. peer average of 48.8%).

Likely to deliver industry-leading profitability amid memory price up-cycle

Memory contract prices have recently shifted back to an upward trajectory. Regarding year-end PC DRAM price levels, forecasts (TrendForce) have been raised by an additional 9.6% for DDR5 and 5.9% for DDR4, bringing cumulative upside relative to Feb. 2026 prices to 28.3% and 18.3%, respectively. NAND price estimates have also been revised upward, with year-end 1Tb wafer projections lifted by 48.2% for QLC and 45.4% for TLC.

For 1Q26, we expect SK Hynix to post revenue of W47tr (+43% QoQ) and operating profit of W30.4tr (+58% QoQ). We estimate bit growth at only +2% for DRAM and -1% for NAND, affected by a high base and tight inventory levels. We expect ASP to rise 39% for DRAM and 55% for NAND, reflecting recent price strength.

For 2026, we forecast revenue at W274tr (+182% YoY) and operating profit at W185tr (+292% YoY), up 19.5% and 25.2% from our previous estimates. In light of continued strength in memory prices, we raised our ASP growth assumptions by 31%p for DRAM and 70%p for NAND. We also revised up our HBM ASP growth estimate by 6%p, factoring in potential price upside for HBM3E (driven by conventional DRAM price strength) and a higher shipment mix of HBM4.

At ISSCC 2026, the company disclosed detailed specifications and technological advancements for GDDR7 and LPDDR6. Its GDDR7, built on the 1c-nm process and offering 24Gb density, achieved a data transfer rate of 48Gb/s at standard voltage (1.2V)―not only exceeding the JEDEC standard but reaching levels beyond the measurement limits of available test equipment.