By Yoon Ja-young
Analysts expect rosy results for Hynix despite two consecutive months of losses.
The chipmaker, in the process of being taken over by SK Telecom, posted a loss for two consecutive quarters, as its operating loss stood at 167 billion won with 2.6 trillion won in sales.
However, analysts have a positive outlook on Hynix, expecting the chipmaker to see a turnaround in the second quarter.
“A decrease in inventory, a change in the manufacturing process and the expansion of NAND bolster the optimism. The semiconductor market is expected to recover from the middle of the second quarter. It seems to be the right time to pay attention to Hynix, which is getting better fundamentals,” said Brian Park, an analyst at TongYang Investment & Securities.
Hynix cut operating losses by 40 percent from the third quarter, thanks to cost cutting following changes in the manufacturing process. “While the demand for DRAM will expand on the growth of desktops led by Ultrabook, there will be a limited supply. The better DRAM market will quickly turn the whole performance around for the better.”
Park pulled up the target price of Hynix to 35,000 won, up 25 percent from the previous report.
Byun Han-joon, an analyst at KB Investment & Securities, noted the facility investments of Hynix as a positive factor for the long-term. “Both DRAM and NAND will accelerate improving the performance from the third quarter, adding to the plus factor of the share prices. DRAM will see demand recover from the third quarter as Ultrabook bolsters price competitiveness and Windows 8 launches in the market. The company is scheduled to invest 2.5 trillion won in NAND in 2012. When considering the timetable, it will be reaping the fruits of the investment in NAND from the third quarter.”
Song Jong-ho, an analyst at Daewoo Securities, said Hynix got an advantageous competitive edge when considering that it recorded 26 percent margin in the fourth quarter. Elpida of Japan, meanwhile, marked minus 20 percent.
“Hynix will see operating losses grow to around 200 billion won in the first quarter, but it will make a turnaround in the second quarter with around 135 billion won profit,” the analyst said.
“DRAM prices have already hit rock bottom. There may be controversy over the speed of the rise, but in any case it should rise,” Hana Daetoo Securities noted in a report. It added that it is notable that Hynix decided to invest 4.2 trillion won in facility while most of the DRAM manufacturers aren’t making investments due to lack of cash.