The creator is an analyst with Shinhan Funding Corp. He may be reached at doyeon@shinhan.com. – Ed.

OP 1Q21 forecast at KRW1.41tr (+ 45.7% Q / T)

SK Hynix is ​​anticipated to publish working revenue of KRW1.41tr (+ 45.7% QoQ) on gross sales of KRW8.37tr (+ 5.0% QoQ) for 1Q21, barely above market expectations of KRW1 , 35tr. Precise incomes have been in all probability sturdy, on condition that the present forecast displays one-time worker compensation bills of round KRW 90 billion. For 1Q21, ASP DRAM ought to be 7% greater on a QoQ foundation.

OP will bounce 163% over one 12 months in 2021 and 72% over one 12 months in 2022

The primary driver of SK Hynix revenue progress is predicted to shift from demand for chips for cell gadgets and PCs via 1Q21 to servers from 2Q21 as the expansion in demand for servers has but to totally start . For DRAM (8 GB, 2400 Mbps), the hole between spot costs and contract costs has now widened to 44%. Stock turnover charges are nonetheless low, at round 44% of the height of the earlier cycle. We due to this fact imagine that earnings will proceed to exceed market expectations in 2Q21 and 3Q21. Over the 12 months as a complete, working revenue progress is predicted to achieve 163% over one 12 months in 2021 and 72% over one 12 months in 2022.

The launch of the brand new Intel platform and the business’s large-scale transfer from DRAM to DDR5 beginning at 2:21 am will possible result in elevated demand, worth premiums and provide constraints, additional illuminating the outlook for DRAM market circumstances. NAND provide constraints are additionally anticipated to worsen as chipmakers start to noticeably embrace dual-stack expertise beginning at 2:21 am.

Suggest to build up actions throughout the short-term correction

SK Hynix shares have corrected alongside the broader market in latest buying and selling. We imagine the near-term correction has opened up a superb alternative to build up shares of the chipmaker. The corporate’s income will possible develop at a quicker fee than the rise in KOSPI income and rates of interest. Historic information reveals that previous market rebounds led by the semiconductor business and chipmakers corresponding to SK Hynix coincide with main intervals of rate of interest hikes (2013-2014 and 2016-2017).

Throughout occasions of financial restoration, reminiscence producers usually see a restricted enhance in total prices, with mounted prices making up the majority of the entire. Gross sales of reminiscence chips, alternatively, have a tendency to extend sharply with greater ranges of ASP. In consequence, the reminiscence business usually experiences quicker revenue progress than the general market throughout occasions of financial restoration.

The primary funding factors for SK Hynix are: 1) expectations of a robust enchancment in earnings from 1Q21; 2) expectations of document income in 2022; and three) a possible reassessment ought to NAND market circumstances recuperate, supported by the acquisition of Intel’s NAND flash enterprise. We advocate that you just accumulate shares of SK Hynix throughout market fluctuations.



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