Why Some Investors Say SK Hynix Can Double to 4 Million Won

IBK Investment & Securities Maintains 4 Million Won Target for SK Hynix

Raises D-RAM ASP Forecast

"Memory Price Volatility to Ease"

Analysts in Seoul's Yeouido financial district say SK Hynix Inc. is trading at an excessive discount to its earnings and cash-generation power. They argue that strong profitability should be sustained by expanding demand for artificial intelligence memory and limited supply, while a large shareholder-return program could help re-rate the company. Retail investors have also voiced support for SK Group Chairman Chey Tae-won's AI strategy while calling for stronger measures to boost shareholder value.

Kim Woon-ho, an analyst at IBK Investment & Securities, wrote in a report on Oct. 7 that he was maintaining the 4 million won target price for SK Hynix that he first presented in July. Demand for memory continues to rise as AI models grow, while supply growth is likely to remain constrained for a considerable period, he wrote. Kim also said volatility in D-RAM and NAND flash prices at current levels is low, which should support high profitability and stable cash-flow generation.

IBK's target is more than double the current share price. SK Hynix closed at 1.726 million won on Oct. 7, down 2.65% from the previous session, according to AI-based investment information platform Epic AI. Korea Investment & Securities has the highest target among brokerages at 4.7 million won.

IBK Investment & Securities, however, lowered its third-quarter estimates from its previous forecast to reflect the won-dollar exchange rate. It projected third-quarter revenue of 95.8 trillion won and operating profit of 75.1 trillion won. That would imply an operating margin of 78.4%, up 2.1 percentage points from the second quarter.

Kim said D-RAM likely led third-quarter results as well. He estimated D-RAM revenue at 73.1 trillion won and operating profit at 59.2 trillion won, accounting for 76.3% of total revenue and 78.8% of operating profit. NAND flash revenue was estimated at 22.4 trillion won, with operating profit of 15.9 trillion won. He also raised his estimate for D-RAM average selling prices, or ASP, to reflect price increases in some products.

Kim also highlighted what he described as a world-leading shareholder-return plan. SK Hynix said on Aug. 19 that it would use more than 50% of cumulative free cash flow from 2025 through 2027 for shareholder returns. Industry estimates put the total at at least 90 trillion won.

He also cited buybacks as an additional tool for shareholder returns. Dividends may play a role, but he sees repurchases as the core measure. With SK Hynix already carrying out a 40 trillion won buyback program, the company could launch additional repurchases in the fourth quarter, he said.

IBK Investment & Securities said the company's financial structure should improve quickly on the back of massive cash generation. It projected cash flow from operations this year at 220.596 trillion won. Cash and cash equivalents at the end of this year are forecast at 115.453 trillion won, while net cash is projected at 118.319 trillion won. Next year, cash and cash equivalents are expected to rise to 392.481 trillion won.

The brokerage also stressed the stock's valuation appeal. SK Hynix is projected to trade at 5.0 times earnings this year and 3.8 times next year. Kim said the current share price appears excessively undervalued. His target price is based on projected 12-month earnings per share of 446,092 won and a price-to-earnings ratio of nine times.

Retail investors also appear to be betting on further gains. One shareholder wrote in an online community that demand for AI memory, including HBM4, is structurally increasing and should sustain high profitability and cash generation. Given the sharp earnings improvement driven by HBM competitiveness, the investor said the company should raise per-share value through meaningful shareholder returns such as share buybacks and cancellations, along with higher dividends. The shareholder added that, because investors trust Chey, they hope the company will further strengthen its AI memory edge and adopt policies that return those gains to shareholders.

Kyung-ju Kang, Hankyung.com reporter memory@hankyung.com