SK hynix Hits 1.3 Million Won, but a Warning Emerges: "Stop Chasing the Rally"

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[The Financial News] SK hynix Inc. hit a new intraday high for the first time, briefly rising above 1.3 million won, but one domestic brokerage issued a report downgrading its investment opinion.
According to the industry on the 27th, it was the first time in nine months that a buy rating on SK hynix Inc. was withdrawn in Yeouido.
That day, BNK Securities released a report titled "Slowing Momentum in the Second Half" and lowered its view on SK hynix Inc. from "buy" to "hold." It kept its target price unchanged at 1.3 million won. The call stood in contrast to recent forecasts from major brokerages, which have been raising target prices to more than 2 million won.
Lee Min-hee, the analyst who wrote the report, said first-quarter sales and operating profit came in at 52.57 trillion won and 37.61 trillion won, respectively, beating market expectations by 1% and 3%. However, she noted that the results still fell short of market hopes for quarterly operating profit of more than 40 trillion won.
She added that profitability improved less than the rise in average selling prices, explaining that the main reason was higher unit production costs for both DRAM and NAND flash memory.
She also projected second-quarter operating profit at 60.25 trillion won, but said a slowdown is likely in the second half. She pointed to weaker capital spending by major global big tech customers since March and the growing share of revenue from HBM4, which is relatively less profitable.
Lee's full-year operating profit forecast for SK hynix Inc. is about 236 trillion won, below estimates from major brokerages such as NH Investment & Securities, at about 247 trillion won, and KB Securities Co., Ltd., at about 257 trillion won.
She said there are upside factors in the second half, including shareholder return policies and the issuance of American Depositary Receipts (ADR), but added that the stock should be viewed as range-bound. She predicted that it will now shift into a low price-earnings ratio (PER) stock.
Meanwhile, the last time a buy rating on SK hynix Inc. was withdrawn in the brokerage market was in July last year. At the time, Mirae Asset Securities Co., Ltd. and DB Securities Co., Ltd. each downgraded their view on SK hynix Inc. from buy to hold once. The move reflected the view that much of the company's value had already been priced in after the sharp rise in its share price.
moon@fnnews.com Reporter Moon Young-jin Reporter