Will SK hynix Also Deliver a 'Surprise Earnings Beat' Like Samsung Electronics? ... "Highest Profit Margin in the Industry for General-Purpose DRAM"

[The Financial News] Market expectations are rising as SK hynix's first-quarter earnings announcement is now just three days away. Samsung Electronics Co., Ltd. and Taiwan Semiconductor Manufacturing Company Limited (TSMC) both recently reported record first-quarter profits, prompting analysts to say the semiconductor supercycle has entered a new phase unlike any seen before.
According to the securities industry on the 20th, major domestic brokerages began revising up their first-quarter forecasts for SK hynix immediately after Samsung Electronics released its results on the 7th. The consensus now stands at roughly 35 trillion to 40 trillion won, compared with the previous market average in the upper 34 trillion won range.
Kim Sun-woo, an analyst at Meritz Securities, projected on the 18th that SK hynix posted operating profit of 37.5 trillion won in the first quarter, up 95% from the previous quarter's 19.2 trillion won and nearly five times the 7.44 trillion won recorded a year earlier. The operating margin would be 67%. He had previously made one of the closest forecasts for Samsung Electronics' first-quarter results. Kim estimated SK hynix's DRAM and NAND flash memory operating margins at 74% and 48%, respectively. Among them, the operating margin for general-purpose DRAM was expected to reach an industry-leading 84%.
He also predicted that this trend would accelerate further from the second quarter. He forecast consecutive record highs, with operating profit reaching 61.4 trillion won in the second quarter, 72.1 trillion won in the third quarter, and 78.4 trillion won in the fourth quarter. These are figures never before seen in Korean corporate history.
The outlook for server DRAM demand next year is also bright. In addition to demand for memory used in graphics processing units (GPUs), the growing emphasis on CPU computing power suggests that supply will remain tight, keeping the market in a situation where products are sold as soon as they are made. That means the status of memory chip makers has risen significantly.
Market forecasts for SK hynix's first-quarter earnings are generally in the 35 trillion to 40 trillion won range. Estimates include 35.6 trillion won from LS SECURITIES Co., Ltd., 38.46 trillion won from IBK Securities Co., Ltd., 38.9 trillion won from Mirae Asset Securities, 40 trillion won from KB Securities, 40.1 trillion won from Heungkuk Securities, 40.4 trillion won from Yuanta Securities Korea Co., Ltd., and 40.3 trillion won from Kiwoom Securities Co., Ltd.
The prevailing view is that earnings will continue to rise every quarter. In the second quarter, they are expected to jump sharply into the 60 trillion won range. Many analysts then expect them to climb again to the 70 trillion won range in the third quarter and around 80 trillion won in the fourth quarter.
KB Securities recently said SK hynix could post annual profit of around 250 trillion won and, if the won remains in the late-1,400 range against the dollar, could rise to fourth place among global big tech companies in terms of operating performance. That would put it ahead of Microsoft Corporation, with about 245 trillion won, and Alphabet Inc. (Google), with about 240 trillion won, in earnings.
ehcho@fnnews.com Jo Eun-hyo Reporter