“Historic undervaluation set to unwind”: SK hynix headed for ₩3.5 million... APR still seen in “oversold territory” despite 27% target-price cut [Stocktopia]

[Financial News] Here is a roundup of reports from major securities firms on the morning of November 2.
Analysts say SK hynix has reached a turning point in overcoming its historically deep undervaluation, as record earnings coincide with the largest shareholder returns in its history.
Hyundai Engineering and Construction’s third-quarter operating profit beat market expectations, but analysts said its share price would need actual confirmation of nuclear power plant contract awards to stage a meaningful rebound. APR’s third-quarter results fell short of expectations amid won strength and its target price was cut, but analysts said its share price had fallen excessively relative to its growth prospects.
◆ SK hynix (000660)— KB Securities / Analyst Kim Dong-won
- Target price: ₩3.5 million (maintained) | Previous close: ₩1.418 million
- Investment rating: Buy (maintained)
KB Securities maintained its ₩3.5 million target price, saying SK hynix would enter a phase of overcoming its undervaluation on the back of record earnings and large-scale shareholder returns.
KB Securities identified three developments that could boost SK hynix’s corporate value: allocating at least 50% of its memory production capacity for 2027–2028 to five-year long-term supply agreements (LTAs); effectively selling out the planned DRAM and high-bandwidth memory (HBM) output for the three years through 2029; and announcing a shareholder-return policy on the scale of ₩100 trillion, combining ₩60 trillion in share cancellations with at least ₩30 trillion in cash dividends.
It estimated that fourth-quarter operating profit would rise to ₩104 trillion. DRAM and NAND shipments are expected to increase and selling prices to continue climbing, while HBM4 is expected to account for a larger share of sales than HBM3E.
Analyst Kim also noted that the recent sharp drop in the share price had substantially lowered its price-to-earnings ratio (P/E). He said, “SK hynix’s share price has fallen 50% from its peak, bringing its P/E to around 3 times based on 2027 earnings and putting it in an exceptionally undervalued position comparable to that seen during the financial crisis.” He added, “With record earnings and undervaluation coexisting at this point, the largest shareholder returns in the company’s history are expected to be a decisive turning point in overcoming its historic undervaluation.”※ Long-Term Agreement (LTA)An agreement under which a semiconductor supplier and its customer set supply volumes and pricing terms in advance for several years. During supply shortages, such agreements are often concluded on terms favorable to suppliers and are seen as helping stabilize earnings.※ High-Bandwidth Memory (HBM)A high-performance memory semiconductor that greatly increases data-processing speeds by stacking multiple layers of DRAM vertically and connecting them with through-silicon vias (TSVs). It is used in artificial intelligence (AI) accelerators that handle large volumes of computation.
◆ Hyundai Engineering and Construction (000720)— IBK Investment & Securities / Analyst Jo Jeong-hyeon
- Target price: ₩120,000 (cut 14.3% from ₩140,000) | Previous close: ₩83,600
- Investment rating: Buy (maintained)
IBK Investment & Securities cut its target price for Hyundai Engineering and Construction to ₩120,000, although the company’s third-quarter operating profit beat market expectations. Operating profit came to ₩221.7 billion, 4.9% above expectations. Analyst Jo attributed the improvement in profitability to the increased revenue share of housing projects with normalized profit margins that began construction in 2023 or later, rising from 46% at the end of last year to 76% at the end of the third quarter.
However, he said cash flow needed to be monitored. Cash and deposits stood at ₩3.5 trillion at the end of the third quarter, down ₩1.7 trillion from the end of last year, while borrowings rose from ₩3.9 trillion to ₩4.5 trillion. Analyst Jo said, “As cash collection appears somewhat slower than at peer companies, we need to see whether net debt declines gradually.”
Nuclear power projects were also cited as a challenge. The pipeline for nuclear power contracts next year includes large nuclear plants in the United States and Bulgaria, as well as U.S. small modular reactor (SMR) projects involving companies such as Holtec International and TerraPower. However, contract awards for large nuclear projects worldwide have yet to gain momentum.
Analyst Jo emphasized, “This is a phase in which expectations alone are unlikely to drive a share-price reversal,” adding, “For a meaningful rebound in the share price, actual awards of contracts with strong long-term visibility need to be confirmed.”※ Small Modular Reactor (SMR)A small reactor whose main components are manufactured in modular form at a factory and assembled on site. It is being considered as a power source for data centers because it takes less time to build than a large nuclear plant and has fewer site constraints.
◆ APR (278470)— Samsung Securities Co., Ltd. / Analyst Jeong Dong-hui
- Target price: ₩400,000 (cut 27.3% from ₩550,000) | Previous close: ₩261,000
- Investment rating: Buy (maintained)
Samsung Securities Co., Ltd. lowered both its earnings estimates for APR and the valuation multiple it applies, cutting its target price to ₩400,000. Analyst Jeong reduced his operating profit estimates for this year and next year by 14% and 4%, respectively, to reflect weak third-quarter results affected by exchange rates. The slowdown in investor sentiment toward the global cosmetics sector was also factored into the target price-to-earnings ratio (P/E).
Third-quarter operating profit was ₩160.6 billion, about 11% below market expectations. With overseas sales accounting for 94% of revenue, the sharp appreciation of the won reduced sales when converted into won. In addition, early adoption of the new accounting standard, IFRS 18, resulted in about ₩15 billion in foreign-currency translation losses being reflected in operating profit, while fulfillment transport costs in Europe also increased.
Analyst Jeong highlighted the expansion of sales channels for Medicube, APR’s flagship cosmetics brand. He said, “Medicube has now secured placement in most major channels and is continuing to secure repeat orders as of October,” adding, “We expect it to set a new quarterly earnings record again in the fourth quarter, supported by year-end peak-season effects such as Amazon’s Black Friday event in November and China’s Singles’ Day.”
The current share price is at 13 times forecast earnings for the next 12 months, well below its historical average since listing. Considering that operating profit is expected to grow 48% next year, Analyst Jeong judged the stock to be in “oversold territory.”※ FulfillmentA service that handles the entire logistics process on behalf of sellers, from storing products to packing, shipping, and returns. As overseas sales grow, related costs such as transportation rise, affecting profitability.

[email protected] Seong Min-seo Reporter