Yuanta Securities Korea maintained its 'Buy' rating and 370 million won target price for SK Hynix stocks on May 28, citing expectations for Long-Term Agreement benefits and shareholder return policies. Analyst Son In-jun stated that recent LTAs are evolving from non-binding volume agreements to binding contracts specifying minimum purchase quantities and pricing structures while strengthening AI infrastructure partnerships. This shift is expected to enhance long-term earnings visibility and reduce profit volatility and valuation discount factors for memory companies.
Yuanta Securities Highlights SK Hynix LTA Evolution and Technology Partnerships
Analyst Son In-jun noted that "past memory long-term contracts were close to non-binding agreements centered on volume, but the LTAs being discussed recently are evolving in a direction that specifies minimum purchase quantities and pricing structures and strengthens partnerships across AI infrastructure businesses including data centers." He added that "binding LTAs are expanding, increasing long-term earnings visibility."
The analyst stated that "this is a change that can lower both the profit volatility and valuation discount factors of memory companies," and that "amid rapid progress in HBM4 revisions and supply negotiations, HBM4E sample shipments are also proceeding normally in the second half, and technology partnerships with key customers are expected to be maintained closely."
SK Hynix Operating Profit Projections Show 457% Growth for 2025
Yuanta Securities adjusted SK Hynix's Q2 operating profit estimate to 61.4 trillion won, down slightly from the previous estimate of 62.8 trillion won. However, HBM4, which began shipping from late Q2, is projected to contribute to second-half performance.
The securities firm projected SK Hynix's operating profit for this year at 264.1 trillion won, a 457% surge year-over-year. Next year's operating profit is also forecast at 448 trillion won, a 70% increase from this year.
Analyst Son In-jun Forecasts Favorable Pricing Negotiations
Analyst Son stated that "second-half price negotiations are proceeding favorably, and we judge that performance from Q3 onward is highly likely to exceed lowered market expectations." He explained that "memory shortage intensity is deepening as strong CPU demand and competition among high-end smartphone manufacturers to secure volume intertwine, and in particular, second-half price negotiations with customers are proceeding smoothly, so the relatively low blended ASP in Q2 will be recovered to some extent."
Yuanta Securities Anticipates Q4 Shareholder Return Policy Announcement
Expectations for additional shareholder return policies in Q4 are viewed as positively affecting stock price increases. Analyst Son stated that "we judge there is a high possibility that additional shareholder return policies will be announced in Q4," adding that "if additional returns such as dividend expansion and treasury stock buyback and cancellation proceed and detailed announcements about LTAs coincide, it can provide confidence in long-term earnings stability and lead to structural valuation re-rating."
Analyst Assesses ADR Premium Gap Dynamics
Regarding the American Depositary Receipt listing, the analyst noted that "the premium gap between ADR and the main stock is likely to be maintained for a considerable period after ADR listing," stating that "considering the limited circulating volume of ADR, high accessibility for US investors, and constraints on conversion and arbitrage between the main stock and ADR, it is difficult to expect short-term price convergence."
However, he added that "in the long term, expansion of the global investor base, inflow of foreign demand, and ETF inclusion are expected to positively affect the stock price of the main stock as well."
FAQ
What target price did Yuanta Securities set for SK Hynix stocks on May 28?
Yuanta Securities Korea maintained its target price of 370 million won for SK Hynix stocks on May 28, keeping its 'Buy' investment rating unchanged.
What are Yuanta Securities' operating profit projections for SK Hynix?
Yuanta Securities projected SK Hynix's operating profit for this year at 264.1 trillion won (a 457% year-over-year increase) and next year's operating profit at 448 trillion won (a 70% increase from this year). The firm adjusted Q2 operating profit estimate to 61.4 trillion won from the previous 62.8 trillion won.
What did analyst Son In-jun say about SK Hynix's Q4 shareholder return policy?
Analyst Son In-jun stated there is a high possibility that additional shareholder return policies will be announced in Q4, including potential dividend expansion and treasury stock buyback and cancellation, which he expects to provide confidence in long-term earnings stability.
