“Don’t waver—SK hynix is heading for 4 million won” ... “Hyosung Heavy Industries: No reason to doubt medium- to long-term earnings growth despite an earnings miss” [Stocktopia]

[Financial News] Here is our roundup of reports from major securities firms as of the morning of October 7.
An analysis says SK hynix is excessively undervalued at its current share price, as memory prices continue to rise and large-scale share buybacks are also expected.
Hyosung Heavy Industries is expected to fall short of third-quarter earnings forecasts because revenue recognition for high-margin orders has been delayed, but its medium- to long-term growth is seen as firmly intact. HD Hyundai Electric’s target price was lowered due to the decline in the exchange rate, but analysts say its weak earnings have already been priced in.
◆ SK hynix (000660)— IBK Investment & Securities / Analyst Kim Woon-ho
- Target price: 4 million won (maintained) | Previous close: 1,773,000 won
- Rating: Buy (maintained)
IBK Investment & Securities maintained its 4-million-won target price for SK hynix, saying the effects of share buybacks would add to its high profitability. Analyst Kim Woon-ho said, “There are many reasons not to waver,” adding, “I believe the stock is currently significantly undervalued.”
Third-quarter earnings estimates were cut by 1.9% and 5.6%, respectively, from previous estimates to reflect the decline in the won-dollar exchange rate, but the operating margin is projected to rise 2.1 percentage points from the previous quarter to 78.4%.
Kim said, “Memory demand continues to rise as AI models grow, while the limited increase in supply is expected to persist for a considerable period. At current levels, DRAM and NAND prices are expected to show little volatility, and high profitability should be maintained, enabling stable cash flow generation.”
Kim said, “I estimate shareholder returns will amount to at least around 90 trillion won in 2026,” adding, “Beyond the 40 trillion won already being deployed, additional share buybacks are expected in the fourth quarter.”
◆ Hyosung Heavy Industries (298040)— Hana Securities / Analyst Yoo Jae-seon
- Target price: 4.3 million won (maintained) | Previous close: 2,807,000 won
- Rating: Buy (maintained)
Hana Securities maintained its 4.3-million-won target price even as it forecast that Hyosung Heavy Industries’ third-quarter earnings would fall short of market expectations. The shortfall is due to the delayed recognition of revenue from high-margin orders.
Analyst Yoo Jae-seon said, “As in the previous quarter, short-term earnings volatility will be unavoidable because revenue recognition for some high-margin orders has been delayed,” adding, “However, if earnings are recognized normally within the year, the company can meet its guidance for at least 25% annual revenue growth in its heavy industries division.”
This means the earnings have not disappeared but have simply shifted to the fourth quarter, so the company can still meet its annual target. Although below expectations, the third-quarter operating margin is forecast to reach 16.3%, setting a new quarterly high.
The company also has ample room to grow. U.S. orders account for more than half of its total order backlog, while North America made up just 38% of sales as of the second quarter. As its accumulated orders turn into revenue, both the company’s scale and its margins could rise.
Yoo emphasized, “There is no reason to doubt medium- to long-term earnings growth, as the share of high-margin revenue from projects of 500 kilovolts (kV) or more will begin to be fully reflected from the second half of 2027.”
◆ HD Hyundai Electric (267260)— Daishin Securities / Analyst Heo Min-ho
- Target price: 1.02 million won (cut 11.3% from 1.15 million won) | Previous close: 683,000 won
- Rating: Buy (maintained)
Daishin Securities lowered its earnings forecasts for HD Hyundai Electric due to the decline in the won-dollar exchange rate and cut its target price to 1.02 million won. However, it maintained its Buy rating, saying the stock had already fallen to a level that reflected the bad news.
As a company with a high export share, it earns less revenue and profit in won when the exchange rate falls. Third-quarter operating profit is expected to rise 20% year on year to 296 billion won, but fall short of the market consensus estimate of 322 billion won.
Analyst Heo Min-ho said, “Standardization of ultra-high-voltage transformers for AI data centers (AIDCs) and the accelerated ramp-up (increase in production) at the expanding U.S. plant are continuing,” adding, “On that basis, the company is expected to expand supply of power and distribution transformer packages, while also winning more orders for high-margin products such as 765-kV transformers and gas-insulated switchgear (GIS).”
Concerns about opposition to AI data center construction and tighter regulations ahead of the U.S. midterm elections were cited as factors creating uncertainty about the pace of orders for ultra-high-voltage transformers. Analyst Heo said, “Concerns about opposition to AI data center construction and tighter regulations could create uncertainty about the pace of order growth for ultra-high-voltage transformers.”
By contrast, planned reforms by the U.S. Federal Energy Regulatory Commission (FERC) were cited as a positive factor. FERC is set to receive reports on reforms from six grid operators between November 16 and 20, covering issues such as speeding up grid connections for large power users and allocating costs. Analysts say that changing the order for grid connections from “first to apply” to “first ready” would reduce speculative applications and review bottlenecks, speeding up power grid construction.
Heo added, “To address the company’s undervaluation relative to global peers, visibility needs to improve on high-margin project orders, increased production and other areas,” adding, “Now is the time to announce a large-scale expansion of production capacity.”※ Gas-insulated switchgear (GIS, gas-insulated switchgear)This equipment houses circuit breakers and other devices that switch electricity on and off inside a metal enclosure filled with a special gas that prevents electricity from leaking out. It can be installed in far less space than conventional equipment, making it especially useful at urban substations and data centers, where land is expensive.※ Grid interconnectionThis is the connection of facilities that generate or consume large amounts of electricity, such as power plants and data centers, to the existing power grid. In the United States, a surge in connection requests has created bottlenecks, with reviews alone taking several years. Clearing these bottlenecks is necessary to speed up investment in the grid and transformers.

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