With HBM4 and dual catalysts for the US stock listing, JP Morgan raises the target price for SK Hynix to 1 million KRW
JP Morgan raised the target price for SK Hynix to 1 million KRW, believing that the long-term growth in AI memory demand and the plan for a U.S. stock listing will drive the stock price up. Analysts maintained an "overweight" rating, expecting a 20% to 25% upward revision in earnings per share for the fiscal years 2026 to 2027. SK Hynix's stock price rose 1.26% to 765,500 KRW per share. JP Morgan recommends that investors accumulate positions based on strong expectations for an upward cycle in the storage industry
JP Morgan has significantly raised the target price for SK Hynix to 1 million Korean won. The bank believes that the long-term growth trend in AI memory demand remains unchanged, combined with the potential U.S. stock listing plan, will serve as a dual catalyst for driving up the stock price.
According to Wind Information Trading Desk, JP Morgan's Jay Kwon analysis team maintained an "overweight" rating on SK Hynix in a report on the 16th, and raised the target price for December 2026 from the previous 800,000 Korean won to 1 million Korean won. Analysts pointed out that strong pricing momentum in the next 3 to 6 months will drive upward revisions in earnings expectations, with an anticipated 20% to 25% upward revision in earnings per share (EPS) for the fiscal years 2026 to 2027. As of the time of publication, SK Hynix's stock price rose 1.26% to 765,500 Korean won per share.
In addition to strong fundamentals, new dynamics in capital operations have also become a market focus. According to a previous article by Wall Street Insights, SK Hynix stated in a regulatory filing last December that the company is "evaluating various measures to enhance corporate value, including the possibility of utilizing treasury stock for a U.S. stock market listing, but no final decision has been made yet." JP Morgan believes that an ADR listing will be the next key event catalyst, likely narrowing its valuation gap with U.S. peers.
Benefiting from the consolidation of its leading position in HBM4 technology and the extension of the traditional memory cycle, JP Morgan recommends that investors accumulate positions. The bank's target price set for the end of 2026 reflects expectations for a stronger and longer upward cycle in the storage industry, granting a 30% premium to its historical peak price-to-book ratio (P/B).
HBM4 and Capacity Expansion Consolidate Technical Moat
JP Morgan analyst Jay Kwon pointed out in the report that SK Hynix's recently announced 19 trillion Korean won packaging plant investment plan reaffirms the company's firm commitment to prioritizing the development of AI memory business solutions. This plan targets the new PT7 plant, which is expected to begin mass production in 2028, aiming to integrate backend packaging and testing resources scattered across multiple plants and expand production capacity.
Although the share of HBM sales is expected to temporarily decline to 30% this year (down from 38% last year) due to the significant rise in traditional memory prices, JP Morgan predicts that this proportion will rebound to 39% starting in 2027 and continue to rise in the following years.
On the technology front, JP Morgan believes that SK Hynix will continue to maintain its market share and technological leadership. Although SK Hynix's value share is expected to slightly decline to just below 50% due to high base effects and normalization of competitors' shares, the company will still hold a major share in the next-generation HBM4/4E market, thereby supporting the industry's high profit margin performance
Strong Pricing Momentum Drives Earnings Expectations Upward
The report shows that server demand is driving upward potential in the traditional DRAM and NAND markets. Based on upward revisions using the CoWoS model, JP Morgan has raised its estimated potential market size (TAM) for HBM from 2026 to 2027 by 7-9%, maintaining a bullish outlook on the multi-year upward cycle.
As a result, JP Morgan has increased its EPS expectations for SK Hynix for the fiscal years 2026 to 2027 by 20-25%. The new target price of 1 million Korean won is based on a price-to-book ratio (P/B) of 2.7 times, which implies a 30% premium compared to the historical peak P/B over the past 15 years. Analysts believe that, given the higher beta coefficient of the pure memory business, the improvement in fundamentals will put SK Hynix in a favorable position.
Reflecting the new PT7 investment plan, JP Morgan has raised its capital expenditure (Capex) forecast for the fiscal years 2026 to 2027 to 36-48 trillion Korean won, with the incremental increase mainly coming from infrastructure spending. Nevertheless, the implied capital intensity remains at 20-23%, significantly lower than the historical average of 33% from 2016 to 2025.
US Stock ADR Listing: A Key Step in Valuation Restructuring
The possibility of SK Hynix listing in the United States is seen as an important way to enhance shareholder returns and reshape its valuation. Reports indicate that the company has received proposals from several investment banks to list approximately 2.4% of its circulating shares, equivalent to about 17.4 million shares, in the form of ADRs (American Depositary Receipts).
In a regulatory filing last December, SK Hynix stated that the company is evaluating the possibility of listing in the US stock market using treasury shares to enhance corporate value. Analysts believe that by listing via ADRs, SK Hynix can not only narrow the valuation gap with peers like Micron and TSMC but may also attract capital inflows from passive funds, ETFs, and pure long funds that only invest in US-listed stocks.
JP Morgan noted in the report that while SK Hynix's management indicated that they might implement a new shareholder return plan earlier if there is a structural change in industry dynamics, it is still too early to assess this possibility. In contrast, the ADR listing is a clearer next key event catalyst.
JP Morgan advises investors to pay attention to the earnings call on January 29, focusing on management's comments regarding HBM4 certification, pricing, and margin impacts. Additionally, discussions on long-term agreements (LTA), updates on supply and demand views across various end markets, and management's stance on the ADR listing will be focal points of market attention
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