Memory Suppliers’ Earnings: Reiterating Our View That Tight Memory Supply Continues Into 2024

Following solid financial results and earnings calls confirming that the memory industry has bottomed out as expected, we have made minor adjustments to our earnings forecasts for South Korean memory suppliers. Our fair value estimate per share for Samsung Electronics is maintained at KRW 80,000, while the fair value per GDR is revised to USD 1,480 from USD 1,560 due to currency movements. Our fair value estimate for SK Hynix is maintained at KRW 140,000 per share. Although inventory levels peaked in mid-2023, they are still at the high levels, especially for NAND. As a result, memory suppliers are expected to continue maintaining lower capacity utilization and to remain cautious about increasing production capacity next year, which should be favorable for memory prices due to limited supply. We believe that the shares of Samsung Electronics are undervalued. SK Hynix’s shares are on the borderline between 3-star and 4-star territory and have about 18%-20% upside to our fair value estimate.