Bank Rating | BOCOM International: Raises SK Hynix target price to 3.5 million KRW, remains optimistic about the long-term outlook of the memory storage industry

Glonghui July 3 — Bank of Communications International released a report stating that, benefiting from the sustained high demand for DRAM and NAND in artificial intelligence data centers, the bank believes that the duration and scale of the uptrend in memory chips may further exceed its previous expectations. Based on Micron's recently disclosed long-term agreements, the bank also noted that potential future fluctuations in memory prices may be milder than before. The bank has postponed its expectation for supply shortages in the memory sector by another two quarters to at least Q4 of 2027, and believes that even if prices decline in 2028, the volatility will likely be more moderate compared to before. In terms of specific price movements, Micron’s latest quarter saw DRAM average selling prices increase more than 60% quarter-on-quarter, while NAND average selling prices rose nearly 85%. The bank is raising its estimates for SK Hynix’s DRAM average selling price in the second fiscal quarter of 2026 to a 55% quarter-on-quarter increase (previously 40%), and NAND to a 65% quarter-on-quarter increase (previously 18%). Taking into account both capacity expansion progress and price trends, the bank is revising up its revenue forecasts for SK Hynix for 2026/27/28 to 370/578/655 trillion Korean won (previously 317/435/563 trillion Korean won). Considering the weakening of the industry cycle, the bank has abandoned using price-to-book ratio in its valuation, and taking into account improved revenue visibility going forward, it has set a target price of 3.5 million Korean won, based on a 14x (unchanged) average price-to-earnings ratio for 2023-28.