From rising DRAM prices to aggressive investments… ‘150,000’ filming and ‘170,000 Nix’ Ghana

SK Hynix’s share price exceeded 140,000 won, surpassing the market cap of 100 trillion won amid expectations for an industry recovery amid rising DRAM prices. Stock prices forecast that SK Hynix’s target price will rise to 170,000 won, and the price will continue to rise.

SK Hynix finished trading at 141,500 won in the securities market on the 26th of last month, the day before. The market capitalization is 101.3 trillion won. Earlier, on the 19th of last month, after surpassing the 130,000 won range (based on the closing price), it continued a steep rise, and re-entered the market cap of 100 trillion won starting on the 23rd (closed price of 138,000 won). On the 25th, the closing price reached an all-time high of 148,500 won and went to the front of ’15 million Nyx’.

The financial investment industry predicts that SK Hynix’s performance will continue to rise as the’memory semiconductor second super cycle’ progresses.

SK Hynix’s 70% of sales come from the DRAM division. This means that the DRAM industry situation is directly related to the company’s performance. Market research firm DRAM Exchange predicts that this year’s server DRAM price will increase by 35-40% compared to the previous year. Due to the spread of Corona 19 last year, demand for the information technology (IT) and home appliance industries surged, and the price of DRAM, which is a major component, rose.This year, data centers are being expanded in various countries including North America, and server DRAM prices are rising.

In addition, the spot price of DRAM installed on PCs has already exceeded $4 last month. It has been 22 months since April 2019 that the spot price of DRAM has exceeded $4. If spot prices continue to rise, DRAM fixed prices are likely to rise as well.

The NAND division, which accounts for about 20% of SK Hynix’s sales, is also expected to recover from the second quarter of this year. SK Hynix announced last year’s results and forecast this year in January, and predicted that “the demand growth rate of NAND in 2021 will be in the early 30%”.

In addition, SK Hynix will complete the first acquisition of Intel’s NAND business at the end of this year. Last year, the two companies signed an acquisition contract worth 1,310 trillion won. Through this, it was possible to aim for the second place in the world in NAND market share at once. The product portfolio has also been expanded by bringing Intel’s Solid State Drive (SSD) technology.

In line with the recovery of the industry, aggressive investment news was also released. SK Hynix is ​​purchasing extreme ultraviolet (EUV) exposure equipment for five years from ASML, a Dutch equipment company. The investment amount is 4.754.9 billion won, which is 7.34% of the total assets (as of 2019). ASML’s exposure equipment is expensive at around 200 billion won per unit, and depending on the supply volume, Samsung Electronics and Taiwan’s TSMC also compete for equipment every year.

According to F&Guide, securities firms’ 1Q earnings estimates (consensus) are projected to increase by 8.5% and 42.9% YoY, respectively, to sales of KRW 7.813.0 billion and operating profit of KRW 1.144 trillion. This year’s sales are estimated at 37,911.7 billion won and operating profit is 9,993.7 billion won. This is an increase of 18.8% and 99.4% from the previous year, respectively.

Kim Kyung-min, a researcher at Hana Financial Investment, who raised SK Hynix’s target price to 175,000 won, said, “EBITA, which means SK hynix’s ability to generate cash flow, has exceeded 7 trillion won in the last 6 months.” “It will not be a big burden to pay the EUV exposure equipment purchase cost in installments for 5 years.” He added, “It has already succeeded in acquiring Intel’s NAND division, and has made a facility investment through a contract to supply EUV exposure equipment, showing a positive direction.”
Reporter Park Hyung-soo [email protected]