HSBC SK Hynix (000660.KP) Buy: Another Surprise in DRAM Prices
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HSBC reiterates a Buy rating on SK Hynix (000660.KP), forecasting further upside surprises in DRAM pricing. Driven by intense AI demand and constrained supply, the bank expects DRAM prices to accelerate in the second half of 2025. HSBC has raised its 2025 DRAM price growth forecast from 20% to 35%, citing robust demand for high-bandwidth memory and DDR5. As the clear market leader in HBM, SK Hynix is uniquely positioned to benefit, with HBM projected to account for over 30% of total revenue. Consequently, the bank upgraded its 2025 earnings per share estimate by 15% to 45,000 KRW. The target price was increased from 240,000 KRW to 280,000 KRW, based on a 2025 price-to-earnings multiple of 6.2 times. With the stock trading near 215,000 KRW, this target implies approximately 30% upside. The bank notes that major manufacturers remain cautious on capital spending, limiting bit supply growth to roughly 10% in 2025, compared to a projected 15% growth in shipment volumes. HSBC believes the market broadly underestimates both the duration and magnitude of the ongoing DRAM pricing cycle. Primary risks include an unexpected slowdown in AI demand, faster-than-anticipated supply increases, and geopolitical tensions. Overall, the firm sees significant earnings leverage for SK Hynix as memory pricing exceeds consensus expectations.
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