STOCKS | LS Securities Cuts SK Hynix Target Price, Raises Samsung Electronics Target

LS Securities cut its target price for SK Hynix by 27.3% to 2.4 million won and kept a buy rating. According to Sina Finance, the firm said next year's high-bandwidth memory profitability is unlikely to meet earlier expectations, lowering its target price from 3.3 million won to 2.4 million won. Researcher Jung Woo-sung said the downgrade was not driven by slower HBM demand or the end of the memory cycle, but by a weaker HBM earnings outlook. He added that Samsung Electronics' entry into HBM4 may partly reduce the premium from concentrated supply. LS Securities had previously expected SK Hynix's HBM operating margin to reach as high as about 80% next year, but after industry research it now sees the margin staying near this year's level of around 60%. The firm also raised its target price for Samsung Electronics by 12.5% to 450,000 won and kept a buy rating. According to Sina Finance, LS Securities said Samsung Electronics' HBM4 shipment share and yield are improving together, and that profit growth may accelerate. The firm estimated that HBM4 shipments accounted for about 5% of Samsung Electronics' HBM products in the first quarter of this year and rose to about 35% in the second quarter. Over the same period, yield improved by more than 5 percentage points. The report said the HBM weakness that had weighed on valuation is gradually fading.