"SK hynix 3.1 million won → 2.64 million won" Target Price Cut as Exchange Rate Falls ... Samsung Electro-Mechanics Faces the Most Severe Supply Shortage Among IT Components [Stocktopia]

[Financial News] Here is a roundup of reports from major securities firms as of the morning of Sept. 29.
SK hynix's third-quarter earnings expectations have been lowered due to the falling exchange rate and the transition to next-generation high-bandwidth memory (HBM). However, analysts expect HBM4 sales to expand significantly from the fourth quarter and memory prices to continue rising.
Samsung Electro-Mechanics was assessed as having reentered an earnings-upgrade phase as supply shortages of substrates and multilayer ceramic capacitors (MLCCs) for artificial intelligence (AI) servers intensified. Kia's target price was sharply reduced as higher raw-material costs and growing electric-vehicle sales weighed on profitability, but analysts said dividends would remain stable even during a period of earnings volatility.
◆ SK hynix (000660)— DS Investment & Securities / Surim Lee, equity research analyst
- Target price: 2.64 million won (down 14.8%; previously 3.1 million won) | Previous close: 1.768 million won
- Investment rating: Buy (maintained)
DS Investment & Securities lowered its third-quarter earnings forecast for SK hynix and cut its target price to 2.64 million won, reflecting the falling exchange rate and changes in the shipment mix during the transition to next-generation HBM. The main reason was its reduction of the assumed third-quarter won-dollar exchange rate from 1,430 won to 1,370 won.
The key point, however, is what happens after the third quarter. Surim Lee said, "The key variables for the stock price are now an improvement in the high-value product mix in the fourth quarter and the potential for upward revisions to 2027 earnings estimates, rather than third-quarter earnings." Lee added, "Expectations for additional shareholder returns to be announced with the third-quarter earnings results, along with a recovery in fourth-quarter earnings, remain catalysts for the stock price."
The shortfall in DRAM shipments during the third quarter is also expected to be reflected in the fourth quarter. Lee also noted that HBM prices, or average selling prices (ASPs), could rise further next year. "Above all, the likelihood of a further increase in the 2027 HBM ASP is high," Lee said. "Despite a larger share of eight-high products, supply shortages are expected to persist as system shipments increase."
The analysis is that once the company moves to eight-high products, the opportunity cost of producing HBM rises because both base-die and back-end processing costs increase, while prices for conventional DRAM also rise. This could strengthen manufacturers' pricing power instead.※ High-bandwidth memory (HBM)HBM is a type of high-performance DRAM made by stacking multiple layers of the memory used by computers and connecting them vertically through tiny holes, known as through-silicon vias (TSVs), drilled between the chips. It significantly widens the pathways for data compared with conventional DRAM, increasing speed while reducing power consumption. HBM is essential for AI accelerators such as NVIDIA graphics processing units (GPUs). HBM4 is the fourth-generation product.
◆ Samsung Electro-Mechanics (009150)— Hana Securities / Minkyung Kim, equity research analyst
- Target price: 3 million won (maintained) | Previous close: 1.499 million won
- Investment rating: Buy (maintained)
Hana Securities maintained its 3 million-won target price for Samsung Electro-Mechanics, saying the company had entered a phase in which earnings estimates were rising again due to supply shortages of high-specification flip-chip ball grid array (FCBGA) substrates for AI servers and multilayer ceramic capacitors (MLCCs).
Samsung Electro-Mechanics disclosed the previous day that it would invest a total of 8.5 trillion won to expand substrate production in Sejong and Vietnam. Since more than 70% of the investment is expected to be financed through customer advances, the investment burden is not considered significant.
Despite continued large-scale capacity expansions by global FCBGA suppliers, FCBGA lead times are far above the normal level of 12 weeks, standing at 48 to 56 weeks," Minkyung Kim said. Kim assessed that "the most severe supply shortage among all IT component sectors is occurring."
MLCC price increases are also imminent. "Samsung Electro-Mechanics is negotiating MLCC prices with its direct customers," Kim said. "Given the high price acceptance of AI server customers, price increases exceeding market expectations are anticipated."
※ Flip-chip ball grid array (FCBGA): A high-value substrate that connects semiconductor chips to mainboards. Chips are flipped over and attached with small solder balls, enabling fast signal transmission and better heat dissipation. FCBGA is a key component in high-performance semiconductors such as AI CPUs and GPUs.※ Multilayer ceramic capacitor (MLCC)An MLCC is an ultra-small component that stabilizes the current in a circuit by storing electricity and releasing it as needed. Hundreds to thousands are used in a single smartphone, while AI servers use tens of thousands, earning MLCCs the nickname "the rice of the electronics industry."
◆ Kia (000270)— Shinhan Investment & Securities / Park Gwang-rae, equity research analyst
- Target price: 195,000 won (down 18.8%; previously 240,000 won) | Previous close: 117,600 won
- Investment rating: Buy (maintained)
Shinhan Investment & Securities lowered its earnings forecasts for Kia for this year and next year and cut its target price to 195,000 won, saying that rising raw-material costs and a larger share of battery electric vehicle (BEV) sales were weighing on profitability.
Aluminum, battery materials and oil prices peaked in May amid tensions in the Middle East. Since raw-material costs are typically reflected in costs one quarter later, the burden in the third quarter is estimated at approximately 320 billion won. As a result, third-quarter operating profit is expected to fall short of market expectations.
A falling exchange rate is unfavorable for an export-driven company such as Kia, which earns dollars from exports, but much of the impact is expected to be offset this time. The decline in the average quarterly exchange rate is expected to cause a loss of about 410 billion won. However, if the exchange rate falls at the end of the quarter, the won value of warranty costs set aside overseas in advance will also decline, generating an estimated mark-to-market gain of about 560 billion won.
Park Gwang-rae explained Kia's strategy as "a structure that raises profitability in the United States through high-margin hybrids and localization, while securing electric-vehicle market share in Europe by sacrificing short-term profits."
Park also advised investors to focus on shareholder returns rather than earnings for the time being. "Stable dividend payments are expected even during a period of increased earnings volatility," Park said, forecasting an expected dividend yield in the high-5% range. The fact that dividends are likely to be maintained even if earnings fluctuate could provide support for the stock price.

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