KB Securities forecasts SK Hynix stocks will undergo revaluation alongside its US American Depositary Receipt (ADR) as global investor access expands following the scheduled July 10 ADR listing. The brokerage maintained a 4.2 million won target price and Buy rating. Analyst Kim Dong-won, head of KB Securities Research Division, stated the ADR listing will broaden the global investor base and both the US ADR and Korean domestic shares are expected to be revalued simultaneously. KB Securities cited TSMC's October 1997 US ADR listing, which led to ADR premium formation over Taiwan domestic shares and subsequent arbitrage activity that elevated valuations in both markets, as a precedent for SK Hynix's anticipated trajectory.
KB Securities Cites TSMC ADR Precedent for SK Hynix Revaluation
Kim Dong-won stated TSMC's October 1997 US ADR listing holds significant implications. Following that listing, TSMC's ADR formed a premium over Taiwan domestic shares based on expanded global investor participation, and conversion and arbitrage demand utilizing price differentials between domestic shares and ADR continued. Kim explained this resulted in a virtuous cycle where Taiwan domestic shares and US ADR were revalued together. He added SK Hynix is likely to experience a similar revaluation flow between US ADR and Korean domestic shares, driven by the scarcity value of Korean memory semiconductor stocks becoming prominently highlighted.
Memory Market Supply Growth Limited Through 2027
KB Securities forecasts memory market conditions will exceed market expectations. Kim Dong-won projected 2027 DRAM and NAND wafer production capacity will increase only 7% and 4% respectively year-over-year. He stated supply growth will remain extremely limited through next year, while demand growth rates are expected to reach 17% and 19% respectively. Kim added 2027 memory supply shortages are likely to intensify compared to 2026. He forecasts second-half memory price increases will surpass market expectations, and 2027 High Bandwidth Memory (HBM) prices are expected to rise over 100% year-over-year considering the profitability gap with general-purpose DRAM.
AI Infrastructure Investment to Triple by 2027
KB Securities anticipates AI investment expansion will drive long-term memory demand. Kim Dong-won projected global AI investment will expand from $390 billion in 2025 to $1.1 trillion in 2027, approximately tripling in two years. He stated AI agents are expected to expand memory demand 3-fold, autonomous driving 5-fold, and robotics over 10-fold. Kim estimated memory's share of AI infrastructure investment will surge from 14% in 2025 to 50% in 2027. He concluded AI infrastructure investment expansion will directly translate into SK Hynix earnings improvement.
SK Hynix Operating Profit Estimates Face Upward Revision
KB Securities projects SK Hynix's 2026 and 2027 operating profit estimates of 290 trillion won and 468 trillion won face high likelihood of further upward revision reflecting improved market conditions. Kim Dong-won stated the current stock price trading at a 12-month forward price-to-earnings ratio of 4.5x has sufficient upside potential, and the semiconductor rally is judged to be not yet over.
FAQ
What did KB Securities forecast for SK Hynix stocks on July 10 ADR listing?
KB Securities forecasts SK Hynix stocks will undergo revaluation alongside its US ADR as global investor access expands following the scheduled July 10 ADR listing. The brokerage maintained a 4.2 million won target price and Buy rating.
Why does KB Securities cite TSMC's 1997 ADR listing as precedent?
KB Securities cited TSMC's October 1997 US ADR listing because it led to ADR premium formation over Taiwan domestic shares and arbitrage activity that elevated valuations in both markets. Analyst Kim Dong-won stated SK Hynix is likely to experience a similar revaluation flow between US ADR and Korean domestic shares.
How does KB Securities project 2027 memory supply and demand will compare?
KB Securities projects 2027 DRAM and NAND wafer production capacity will increase only 7% and 4% year-over-year, while demand growth rates are expected to reach 17% and 19% respectively. Analyst Kim Dong-won stated 2027 memory supply shortages are likely to intensify compared to 2026.
