“SK hynix headed for 3.2 million won” as sensitivity to bad news set to decline... HD Hyundai Heavy Industries target price cut 38% as optimism over shipbuilding stocks wanes [Stocktopia]

[Financial News] Here is a roundup of reports from major securities firms on the morning of October 29.
With SK hynix posting better-than-expected third-quarter results, analysts expect its share price to enter a phase in which it becomes less sensitive to bad news.
Samsung Electro-Mechanics was praised for being poised to sustain sharp earnings growth through 2028 as shortages of multilayer ceramic capacitors (MLCCs) and semiconductor substrates persist. Although HD HHI’s third-quarter results fell short of market expectations, the company was named the top pick among shipbuilding stocks, backed by growing demand for land-based power-generation engines.
◆ SK hynix (000660)― IBK Investment & Securities / Researcher Kim Woon-ho
- Target price: 3.2 million won (cut 20.0%, from 4 million won) | Previous day's close: 1,487,000 won
- Investment rating: Buy (maintained)
IBK Investment & Securities said SK hynix had delivered better-than-expected third-quarter results, maintained its Buy rating and lowered its target price to 3.2 million won.
Researcher Kim Woon-ho said, “Shipment volumes for both DRAM and NAND were similar to our previous forecasts, but the price increases were greater than expected.” He said the target-price cut “reflects the gap between the current share price and the target, not concerns about conditions in the memory market.”
Kim said, “The stock is entering a phase in which it will become less sensitive to bad news,” adding, “The excessively depressed share price and valuation will provide support, and earnings from big tech companies, with even Anthropic’s IPO being announced, could sufficiently offset market concerns.” He also expected continued share buybacks to ease the unsettled supply-demand balance.※ Share-price divergenceThis is the difference between a securities firm’s target price and the actual share price, expressed as a ratio. If the gap widens excessively, securities firms may adjust their target prices to more realistic levels, independently of their earnings forecasts.
◆ Samsung Electro-Mechanics (009150)― Meritz Securities / Researcher Yang Seungsoo
- Target price: 2.3 million won (raised 4.5%, from 2.2 million won) | Previous day's close: 1,306,000 won
- Investment rating: Buy (maintained)
Meritz Securities said Samsung Electro-Mechanics’ third-quarter operating profit exceeded market expectations. It expects fourth-quarter operating profit to far surpass market expectations as well, and raised its target price to 2.3 million won.
Researcher Yang Seungsoo said he estimates that MLCC profitability “has reached around 30%, thanks to the impact of price increases for distribution channels and an improved product mix centered on AI data centers.”
Regarding Samsung Electro-Mechanics’ MLCCs and Ajinomoto Build-up Film (ABF) substrates, Yang said, “Even if ordered now, delivery takes about a year,” analyzing that this “shows the tight supply-demand conditions in both business divisions are likely to persist for a long time.”
Yang identified new long-term supply agreements (LTAs) as a factor that could further raise earnings expectations. “The total value of LTAs disclosed so far is about 4.3 trillion won,” he said, adding, “We expect additional LTAs with multiple customers to be signed this year, lifting market earnings estimates while also extending the valuation benchmark from 2027 to 2028 and beyond.”※ Multilayer ceramic capacitor (MLCC)These are tiny components that store electricity and supply it steadily to a circuit. High-capacity products for AI servers cost substantially more than general-purpose products and are considered a key factor in determining manufacturers’ profitability.※ Ajinomoto Build-up Film (ABF) substrateThis semiconductor packaging substrate is made by stacking multiple layers of insulating film developed by Japan’s Ajinomoto. It is used in high-performance semiconductors such as server CPUs and GPUs, and demand for large-area, multilayer products is growing as AI becomes more widespread.
◆ HD HHI (329180)― iM Securities / Researcher Byun Yong-jin
- Target price: 530,000 won (cut 38.4%, from 860,000 won) | Previous day's close: 285,500 won
- Investment rating: Buy (maintained)
iM Securities maintained its Buy rating on HD HHI but sharply cut its target price to 530,000 won.
Researcher Byun Yong-jin noted that the third-quarter results included one-off losses. The main factors were reduced operations due to a shutdown and lower profits due to the exchange rate decline. 75% of the additional provisions related to performance bonuses and settlement payments following the provisional wage and collective bargaining agreement was also reflected.
Explaining the target-price cut, the report said it “reflects a decline in valuations across the shipbuilding sector following reduced expectations for naval vessels and for rising ship prices.”
Nevertheless, Byun said, “The offshore and engine machinery divisions have higher margins than the shipbuilding division and are providing a solid foundation for earnings.” As of the end of last month, the merchant shipbuilding division had orders worth $13.79 billion, already exceeding its target. The report said the company had also achieved 90.5% of its overall order target.
Byun expects HD HHI to play a pivotal role in the new U.S. shipyard project being pursued by HD Hyundai Group. However, as completion is expected after 2028, it is difficult to factor the project into the company’s value right away. “After that, it will clearly become a driver of earnings upgrades,” he predicted.※ Naval shipbuildingThis business division builds military vessels such as submarines and destroyers. As a defense business serving government clients, it involves large orders and long project timelines.

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