Brokerages draw up positive earnings outlook for the Korean chipmaker


Hynix Semiconductor, the world’s second-largest memory chipmaker, is likely to see its earnings improve in step with market consolidation and stronger DRAM prices, analysts said.

“As the DRAM industry is going through a phase of restructuring, the prices of DRAM are on the rise, which will help Hynix swing to a profit,” said Song Jong-ho, an analyst at Daewoo Securities.

Song predicted that the world’s DRAM market will be reconfigured in a way that allows Samsung Electronics, Hynix and Micron to dominate with semi-oligopolistic influence.

Elpida Memory, a Japanese DRAM maker that was trailing behind Samsung and Hynix, filed for bankruptcy protection last week as it struggled with mounting debt and plunging profitability.

Elpida’s crisis is seen as a sign that frontrunners like Samsung and Hynix could bolster their control in the market. 

Demand for DRAM chips is also showing signs of a recovery, which will prop up Hynix’s earnings and share price.

Daewoo Securities projected that Hynix would post a revenue of 2.4 trillion won ($2.14 billion) in the January-March period this year while narrowing its operating loss to 195 billion won.

The company posted 2.55 trillion won in sales and an operating loss of 167 billion won in the final quarter of last year, hurt by the global economic slowdown that also dented demand for memory chips.

Analyst Song maintained a “buy” recommendation for Hynix stock and increased the target price from 32,000 won to 38,000 won per share.

The positive outlook came as Hynix is also trying to build up a new corporate image following a high-profile 3.34 trillion won acquisition by SK Telecom, SK Group’s flagship mobile unit, in return for a 21.05 percent stake in the chipmaker.

Other brokerages made similarly positive forecasts about Hynix. Eugene Securities, for instance, said Hynix’s grip on the DRAM market would improve in the following months amid the outlook that DRAM prices would go up.

The brokerage forecast that Hynix would post 2.34 trillion won in revenue and trim its operating loss to 193.6 billion won. Eugene’s target price for Hynix has been upgraded from 30,000 won to 37,000 won, with its “buy” recommendation unchanged.

Analysts said Hynix’s operating loss will likely continue through the first quarter of this year but swing to a profit ― as much as 44 billion won ― in the second quarter. The yearly projection for the company’s operating profit will reach 925.9 billion won, E*Trade Securities said.

Hynix, whose 2011 revenue came in at 10.4 trillion won, ships more than 95 percent of its output offshore.

By Yang Sung-jin (insight@heraldcorp.com)