HSBC maintains a Buy rating on SK Hynix and raises the target price to KRW4,000,000

Overview

HSBC published a company research report on SK Hynix, maintaining a Buy rating and raising the target price from KRW2,900,000 to KRW4,000,000. The core view of the report is that SK Hynix continues to benefit in 2Q26 from rising DRAM and NAND prices, margin improvement from the 321-layer NAND upgrade, as well as HBM price increases and expanding AI server demand. The report also incorporates a potential ADR listing into valuation, believing this would help improve accessibility for global investors and support a valuation premium.

Core views

The report believes SK Hynix is HSBC's preferred name within its global memory coverage. 2Q26 earnings are strong, mainly driven by about 40% quarter-on-quarter DRAM ASP growth, about 50% quarter-on-quarter NAND ASP growth, improving NAND margins, and KRW depreciation. Moving into 2H26 and 2027, rising HBM prices, 50-60% HBM market share, and AI-driven demand for general servers and mobile SO-CAMM2 will continue to support revenue and profit growth.

Analysis framework

The report analyzes earnings forecast upgrades, the memory price cycle, HBM supply and demand, and valuation multiple adjustments. On earnings, it focuses on DRAM, NAND, and HBM pricing and margins; on demand, it emphasizes agentic AI, CSP capex, general servers, SO-CAMM2, and ICMS; on valuation, it uses average 2027/2028 BVPS and the target P/B multiple, while adding a 20% valuation premium from an ADR listing.

Methodology notes

• Valuation methodsTarget P/B multiple valuation

  Derive the target price by multiplying average 2027/2028 BVPS by the target P/B multiple.

  HSBC raises the target P/B from 2.8x to 3.4x and applies it to the updated average 2027/2028 BVPS of KRW1,184,397, arriving at a target price of KRW4,000,000.

• Valuation adjustmentADR premium

  A potential ADR listing improves accessibility for U.S. and global investors, thereby supporting a valuation premium.

  The report references Micron's long-term premium relative to SK Hynix and considers shareholder-friendly policies and improved access for global investors, adding a 20% premium to the original P/B multiple.

• Earnings forecastMemory price and margin forecast

  Derive revenue and operating profit through changes in DRAM, NAND, and HBM prices and margins.

  The report expects 2Q26 DRAM ASP to rise 40% quarter on quarter and NAND ASP to rise 50% quarter on quarter, and believes the 321-layer NAND upgrade and HBM price increases will continue to support upward revisions to 2026-2028 operating profit forecasts.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• SK Hynix (000660 KP)

  Primary subject of coverage; Korea-listed ordinary shares.

  Strengths

  Rising DRAM, NAND, and HBM prices; about 50-60% HBM market share; AI servers, CSP capex, and SO-CAMM2 demand provide growth support; a potential ADR listing improves global investor accessibility.

  Weaknesses

  Earnings are highly sensitive to the memory price cycle, FX rates, and the capex cycle.

  Comparison

  The report notes that over the past 13 years Micron has traded at an average 35% valuation premium to SK Hynix, serving as a reference for the valuation impact of ADR accessibility and shareholder return policies.

  Risks

  Higher U.S. interest rates, more aggressive capacity expansion by memory makers, KRW appreciation, and geopolitical conflict could pressure earnings and valuation.

• HY9H GR

  GDR listed on the Frankfurt Stock Exchange.

  Strengths

  The report derives fair value based on the Korean local share target price and a 1:1 conversion ratio.

  Weaknesses

  Fair value is affected by the EUR/KRW exchange rate and the local share target price.

  Comparison

  The report gives a GDR target price of EUR2,319 versus the previous EUR1,731.

  Risks

  FX fluctuations, changes in local share valuation, and liquidity differences.

• HYXS LX

  GDR listed on the Luxembourg Stock Exchange.

  Strengths

  The report derives fair value based on the Korean local share target price and a 1:1 conversion ratio.

  Weaknesses

  Fair value is affected by the USD/KRW exchange rate and the local share target price.

  Comparison

  The report gives a GDR target price of USD2,597 versus the previous USD2,042.

  Risks

  FX fluctuations, changes in local share valuation, and liquidity differences.

Key data

• Target priceKRW4,000,000Raised from KRW2,900,000.
• Current share priceKRW2,555,000As of June 23, 2026.
• Expected upside+56.6%Based on the target price and current share price.
• 2Q26 sales forecastKRW82trn+56% quarter on quarter, +269% year on year.
• 2Q26 operating profit forecastKRW66trn+76% quarter on quarter, +618% year on year, slightly above market consensus.
• 2Q26 NAND operating margin65%The report says this is above 30% in 4Q25.
• 2027 sales forecastKRW556trn+59% year on year.
• 2027 operating profit forecastKRW452trn+59% year on year.
• 2026/2027/2028 operating profit forecast revisions+8%/+17%/+18%Driven by stronger commodity memory and HBM prices.
• Target P/B3.4xPrevious 2.8x, including a 20% ADR premium.

Impact & implications

If the report's view plays out, SK Hynix's earnings leverage will come not only from the traditional DRAM and NAND price cycle, but also from structural HBM demand in AI servers and valuation re-rating from a potential ADR listing. For investors, the key implication is that both earnings forecasts and valuation multiples are being raised, driving a target price increase; however, this thesis depends on memory prices remaining strong, continued AI/CSP capex, no excessive supply expansion, and no material deterioration in the FX and interest-rate environment.

Risks

• Higher U.S. interest rates, especially when neo-CSPs and OpenAI are advancing investment through financing, could raise funding costs.
• More aggressive capacity expansion by memory makers could weaken price increases and margin expansion.
• KRW appreciation could lead to weaker earnings and margin pressure.
• Geopolitical risks such as conflict in the Middle East could affect market risk appetite and supply chain expectations.

What to watch

• Whether actual 2Q26 sales, operating profit, and NAND margin meet the report's forecasts.
• Whether DRAM, NAND, and HBM prices continue to rise in 2H26.
• Whether pricing for HBM3E 12-high and HBM4 can achieve the premium assumed in the report.
• Progress on an SK Hynix ADR listing and its impact on global investor accessibility and valuation multiples.
• Whether CSP capex, AI server shipments, and SO-CAMM2 demand remain strong.
• New capacity additions in the memory industry and the expansion pace of competitors.