Svmuu News: Morningstar equity analyst Jing Jie Yu stated that the firm is maintaining its fair value estimate for SK Hynix ADRs at $160 per share and, after assessing long-term cyclical risks, believes the valuation is reasonable. SK Hynix plans to use the 40 trillion won raised from this IPO for future wafer fab investments. However, the analyst noted that the primary purpose of the IPO is to boost the company’s valuation, rather than to address urgent financing needs. Valuation multiples for South Korean memory chip companies have long been lower than those of their U.S. counterparts, and SK Hynix’s current cash reserves are expected to be sufficient to meet its investment needs.
Morningstar projects that SK Hynix’s earnings before interest, taxes, depreciation, and amortization (EBITDA) will reach 317 trillion won in 2026 and 474 trillion won in 2027, far exceeding the amount raised in this offering. Therefore, the actual contribution of this fundraising to capacity investments is relatively limited; it is more symbolic in nature, though the intended use of the funds remains reasonable.
Looking ahead, Morningstar believes that the earnings outlook for memory chip manufacturers is highly unpredictable, and SK Hynix’s ADRs and South Korean-listed shares may continue to experience significant volatility; therefore, it maintains its “Extremely High Uncertainty” rating for the company. (Jin Shi)