SK hynix to post strong Q2 earnings on price hikes: analysts

SK hynix Inc., South Korea's No. 2 chipmaker, is expected to deliver strong second-quarter earnings, analysts here said Friday, due to a rise in memory chip prices.

SK hynix was estimated to log 9.92 trillion won ($8.6 billion) in sales in the April-June period, up 15.3 percent from a year earlier, while its operating profit was projected to reach 2.76 trillion won, up 41.8 percent from a year ago, according to the data from 11 local brokerage houses compiled by Yonhap Infomax, the financial news arm of Yonhap News Agency.

Compared with the first quarter, SK hynix's second-quarter sales and operating profit were expected to jump 16.8 percent and 108.4 percent, respectively.

SK hynix will announce its second-quarter earnings results later this month.

The company is expected to reflect a one-off cost related to employees' bonuses in the second quarter, which could be more than 100 billion won, but analysts said an increase in prices of DRAM and NAND flash chips and solid demand from data centers must have led to the chipmaker's strong bottom line in the April-June period.

"Its DRAM sales are expected to increase 19.2 percent from a quarter earlier, while those of NAND are estimated to expand 1.6 percent," Kim Un-ho, a researcher at IBK Investment & Securities, said. "The price hike of DRAMs will largely improve its operating margin, while the increase in NAND prices will reduce its losses."

SK hynix is the world's second-largest DRAM maker behind Samsung Electronics Co. DRAM accounts for nearly 70 percent of its total revenue.

Market researcher TrendForce estimated that the contract price of DRAM products increased 18-23 percent in the second quarter, while that of NAND rose 5-10 percent in the cited period.

For the third quarter, analysts forecast a positive result for SK hynix, as the memory price hike is projected to continue.

"We expect DRAM and NAND price growth to be 11 percent and 6 percent in the third quarter, respectively," Choi Do-yeon, a researcher from Shinhan Investment, said. "Manufacturers' inventory level is tight, while the increase in server demand is expected to continue, so we believe it's too early to worry about the memory chip industry reaching its peak." (Yonhap)