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SK hynix Inc. SKHY

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The bet you're really making is that the world keeps building AI data centers, and keeps buying SK Hynix's memory chips to feed the processors that run those models. You're betting SK Hynix stays the top supplier of HBM, the stacked memory bonded right next to Nvidia's chips, and that memory prices stay high instead of collapsing the way they always have. Right now it is going better than at any point in the company's history: profit per share ran from ₩1,250 to ₩8,760 in four quarters, each above forecast, with the most recent two quarters landing 50% and 71% ahead of consensus. You pay about 8 times trailing twelve-month earnings, and closer to 5 times if this quarter's pace holds, the least the stock has ever cost on profit, because everyone knows memory earnings peak right before they fall.

Key data

Price₩177,000
52-week range₩124,800 to ₩194,800
P/E, trailing / run-rate7.8x / ≈5x
EV/EBITDA (TTM)7.9x

The business

SK Hynix makes memory chips. Two kinds: DRAM, the fast working memory a computer thinks in, and NAND flash, the storage that keeps data when the power is off. Three companies make almost all the world's DRAM, Samsung, SK Hynix, and Micron, because a new memory fab costs tens of billions and takes years, so no fourth player walks in. Inside DRAM sits the prize: HBM, high-bandwidth memory, eight to twelve DRAM dies stacked and wired together so they can sit inches from an AI processor and feed it fast enough. A single HBM stack sells for several times a plain DRAM chip, and SK Hynix got there first and best, which is why it is the anchor HBM supplier into Nvidia's accelerators. A small foundry business rounds it out. The moat is the oligopoly plus a yield-and-packaging lead on HBM that rivals have spent two years trying to close.

Inside the complete Back of Napkin

  1. 01The business
  2. 02The numbers
  3. 03Management
  4. 04How it fails or surprises you
  5. 05Closing thoughts
  6. 06Methodology

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