“SK hynix could reach 2.3 million won ... HBM alone can explain its market cap”

[Financial News] SK hynix shares have fallen sharply from their peak, but analysts are instead saying the company’s current valuation is excessively low.
The business involving HBM, a key AI semiconductor product, alone could account for 93% of SK hynix’s current market capitalization next year, and its value could exceed the company’s market cap by 2028.
On the 4th, iM Securities issued a research report on SK hynix, assigning it a ‘Buy’ rating and setting a target price of 2.3 million won. Compared with the closing price of 1,398,000 won on the 29th of last month, that represents 64.5% upside.
The target was calculated by applying a price-to-book ratio (PBR) of 2.3 times to next year’s projected book value per share (BPS). This is more than two standard deviations above SK hynix’s average PBR since its listing.
The report’s main focus is a reassessment of the value of the HBM business. iM Securities expects SK hynix’s HBM revenue to rise from 43 trillion won in 2026 to 183 trillion won in 2028.
Applying TSMC’s price-to-earnings ratios (PERs) for the relevant periods to earnings from the HBM business, iM Securities estimated its value at about 946 trillion won in 2027.
That amounts to 93% of SK hynix’s current market capitalization. The analysis estimated that the HBM business would grow to about 1,372 trillion won in 2028, or 135% of the current market cap.
Go Ui-young, an analyst at iM Securities, stressed, “This means that next year, the current market capitalization will already be explained by HBM alone.” The argument is that the growth potential of the HBM business alone can justify a substantial portion of the company’s current valuation.
The decline in the share price is also considered excessive. SK hynix shares fell 57% from their June 2026 peak to their October low, exceeding the 51% average decline in past semiconductor downturns. The report also noted that, unlike previous corrections, which typically lasted 8–13 months, the plunge this time occurred in just four months.
iM Securities said the market had pushed the share price too low by pricing in a sharp drop in earnings in 2028. However, it said uncertainty over HBM prices and the ability of long-term supply agreements (LTAs) to provide protection could remain a drag on the share price for the time being.
“The higher the share of HBM, the lower the company’s earnings volatility will be,” analyst Go said. He cited the fact that, as production shifts further toward cHBM made to individual customers’ orders, spot-market activity and channel inventories decline, while volumes and prices are set before production begins.
Shareholder returns are another investment point. iM Securities assumed that, following its 2025–2027 policy, SK hynix would continue to return 50% of its free cash flow (FCF) to shareholders after 2028, using 70% of that amount for share repurchases and cancellations. On that basis, the total shareholder return yield relative to the current market cap was estimated at 14% in 2027 and 17–24% annually from 2028 to 2030.
In particular, assuming the company buys back shares in equal amounts each year at the current share price of 1.5 million won, the number of shares could fall by about half by 2030, and earnings per share (EPS) could double compared with a scenario without share repurchases and cancellations.
The report said that even if earnings stagnate after 2028, earnings per share could rise solely because of the declining share count. However, the FCF payout ratio and dividend share after 2028 are iM Securities’ own assumptions, not policies confirmed by the company.
Analyst Go said, “If confidence in the durability of earnings strengthens and the market’s focus shifts to 2028, the BPS-based target price could reach as high as 3.6 million won.” The report’s fair value, calculated by applying a PBR of 2.3 times to its 2028 BPS estimate, is about 3.57 million won.
[email protected] Kang Jung-mo Reporter