Research & Invest
Investor, Institutional Asset Management Background
SK hynix is better owned on the Korean exchange than through its US listing. The US shares trade at a market value more than $300B above the Korean shares, a 35% premium, and the ADR adds country, compliance and exchange risks. Investors wanting US-listed memory exposure could simply combine Micron and Sandisk. x.com
SK hynix looks close to a bottom after a 47% drop, as its cash generation dwarfs a modest earnings miss. Management expects higher-margin products to lift the second half, a $66 billion cash pile growing by $30-50 billion a quarter and, implicitly, a major buyback. Five-year LTAs with about 10 customers should keep DRAM, 73% of the business, at steady or rising prices for 18-24 months. Even a 27% earnings haircut leaves value; the worry is NAND, now 27% of sales, which looks over-earning. x.com
Micron is the better memory buy here because Korean stocks have traded poorly and SK hynix's US ADR carries a massive premium over its Korean listing. SK hynix remains the preferred company; HBM is favored over NAND, making Micron and SK hynix preferable to SanDisk. Memory stocks look cheap, with very attractive risk/reward at these levels, and are unlikely to stay cheap for long. x.com
SK hynix remains a buying opportunity, with its US ADR premium over Korean shares now at an all-time low of 32.66%. x.com x.com
Memory makers' long-term agreements cannot protect pricing when buyers regain leverage. The market underestimates downside even before a price collapse; SK hynix's agreements price within market-linked ranges, per @jukan05. The agreements will be ripped apart when the market turns to buyers, at the latest when China ramps. SK hynix, Samsung, Micron, SanDisk and Kioxia are exposed. x.com
SK hynix is cheaper than Micron even after the US ADR premium, while generating significantly more revenue and holding a stronger HBM position. Its only downside is being Korean, which is also Micron's only upside given geopolitical supply chains; SK hynix's organizational structure is also a risk. x.com x.com x.com x.com x.com
SK hynix and Samsung preferred remain bullish memory bets because the Korean names have a faster payback than Micron. The comparison is 3-4 years versus roughly eight for Micron, though Micron seems to be working fine. AI-trade tail risk could still cause steep losses in these names, as can happen even with low-P/E stocks. x.com
SK hynix's US listing trades at a 20% premium to Korea, hard to justify for a peak cyclical name on peak earnings whose estimates were just revised down. x.com
Micron is the better company than SK hynix because its growth guidance and margins are stronger, though SK hynix is still a great company with further growth ahead. Micron's revenue grew 379% year over year versus SK hynix's 328%; its latest-quarter annualized GAAP P/E is about 7 versus 9 for SK hynix, or 6.5 for SK hynix after adjusting for currency and Kioxia charges. SK hynix's employee profit sharing weighs on its margins. x.com x.com x.com x.com
SK hynix's dividend delivers far less value to holders of its premium-priced US ADRs than buybacks would. The ADR premium destroys a third of the yield, and income taxes push the total value lost versus buybacks above 50%; the dividend decision is atrocious for US holders. x.com x.com
Buying the DRAM dip looks too risky now because CXMT's ambitious next-generation 4F plan and SK hynix's aggressive production expansion raise supply concerns for memory stocks such as Micron, SK hynix and Samsung. CXMT is unlikely to become a serious competitive threat, but it could still weigh on storage-stock sentiment. x.com x.com
SK hynix's pursuit of a US ADR listing could set off a huge catch-up trade toward Micron's valuation multiples. The gap between their multiples is large, and it should shrink simply because US investors could buy SK hynix more easily, which may even weigh on Micron in the short term. A post the author replies to counters that Micron's US fabs justify part of its premium. x.com x.com
