HSBC Research Raises SK Hynix TP to KRW4M, Expects Strong 2Q Results; ADR to Command Premium

HSBC Global Investment Research published a report expecting SK Hynix to deliver strong results in the second quarter, driven by rising DRAM and NAND prices as well as a surge in NAND margins. Higher HBM pricing is expected to provide strong momentum in 2H26 and 2027, while a potential ADR listing would serve as a positive catalyst. The broker maintained a Buy rating and raised its TP from KRW2.9M to KRW4M. Among global memory names, SK Hynix is currently its top pick.

HSBC Global Investment Research said it assigns a 20% premium for a potential ADR listing of SK Hynix. The company submitted its ADR listing plan on June 24, and the broker believes it is now appropriate to incorporate this into its valuation. Over the past 13 years, peer Micron Technology, Inc. (MU.US) has traded at an average 35% premium to SK Hynix, mainly attributable to (1) easier access to US investors, (2) more shareholder-friendly policies, and (3) a higher beta driven by a smaller earnings base. The broker holds a positive view on SK Hynix’s potential ADR listing and has therefore raised its previously assumed price-to-book ratio of 2.8x by 20% to 3.4x, reflecting more proactive shareholder-friendly measures and improved accessibility for global investors.

On the back of stronger commodity memory and HBM pricing, HSBC Global Investment Research raised its operating profit forecasts for SK Hynix for 2026/2027/2028 by 8%/17%/18%, respectively. Applying a 3.4x price-to-book ratio to the updated average book value per share for 2027/2028, the new TP implies an average 2027/2028 price-to-earnings ratio of 8x. The broker’s operating profit forecasts are 3-7% above market consensus.