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ADR listing schedule confirmed

SK Hynix ADRs (SKHY US) scheduled to list on Jul. 10

SK Hynix confirmed its ADR issuance schedule through a securities registration filing on Jun. 24. The company plans to issue up to 17.8mn shares via a third-party allotment, representing a total offering of approximately W45tr based on the previous day''s closing price of W2,555,000. However, the final offering price will be determined by applying a discount of up to 10% to the weighted average share price over the three to five trading days preceding the subscription date.

The firm also explicitly addressed the possibility of arbitrage, a key focus for investors. The ADRs are expected to trade at a premium, creating an incentive for investors to buy Korea-listed underlying shares, convert them into ADRs, and sell them on Nasdaq. In theory, conversion between local shares and ADRs is permitted, and such arbitrage could help narrow the price gap by lifting the price of the underlying shares toward the ADR price. In practice, however, the arbitrage mechanism is constrained by the fixed size of the ADR program. Once the number of outstanding ADRs is established, additional ordinary shares can only be converted into ADRs if existing ADR holders first convert their holdings into underlying shares to free up room within the issuance cap. But given that ADRs are expected to trade at a premium, this scenario is unlikely. Consequently, we expect a certain level of price gap to be maintained.

Following the ADR listing, we also see potential for the stock to be included in the PHLX Semiconductor Sector Index (SOX). Based on the offering reference price, the implied market cap of around US$30bn would rank around 25th among current SOX constituents. With approximately 179mn ADRs expected to be listed, the stock should also comfortably satisfy the index''s trading volume requirements. We expect SK Hynix to be included in the index during the Sep. 2027 rebalancing. If so, this would attract passive inflows from funds tracking the SOX.

Reflecting the potential for higher HBM pricing in 2027

We raise our target price for SK Hynix to W4,200,000 (from W3,800,000). While we left our 2026 earnings estimates unchanged, we lifted our 2027 operating profit forecast to reflect a more bullish outlook for HBM pricing. Our target price is based on a P/B of 6.7x, a 10% discount to the average multiple of Micron and Kioxia. We believe this valuation is justified given our expectation that more than 50% of supply volume will be committed under long-term agreements.

We forecast DRAM ASP growth at +41% for 2Q26, +188% for 2026, and +23% for 2027 and NAND ASP growth at +55% for 2Q26, +250% for 2026, and +28% for 2027. For HBM, we revised up our 2027 ASP growth assumption to +43.7% (from +25.3%). Reflecting this revision, we now forecast operating profit at W71tr for 2Q26, W299tr for 2026, and W449tr for 2027 (with our 2027 forecast revised up by 3.3%).