SK hynix and Sandisk Partner on Next-Gen NAND HBF… Bottom-Sector Focus Amid Fast Rotation

The US Producer Price Index (PPI) was released below market expectations. Following the Consumer Price Index (CPI), this can be read as a signal that the trend of slowing inflation is strengthening. As a result, market concerns about interest rate hikes eased somewhat.

Looking at the PPI breakdown, the annual figures were not bad, but some items still raised concerns. Even so, the overall reading came in below expectations, so the mood in the market was optimistic. Immediately after the PPI release, Nasdaq futures rose sharply. This appears to reflect strong market pricing of expectations for slowing inflation and easing rate-hike concerns.

Sandisk rose 13%, SK hynix 7%, Micron 4%, and Seagate about 5%, bringing the overall memory sector's gain to 3.85%.

This shareholder return policy is a strategy Micron has also used.

Free cash flow is the cash left after a company deducts investment costs from the cash generated by operating activities. Excess free cash flow, by contrast, is the portion of free cash flow remaining after funding business operations and growth, referring to spare cash that can be used for shareholder returns. Some criticize Samsung Electronics for returning only 50% of free cash flow to shareholders, but this may stem from confusing it with excess free cash flow.

It has signed long-term agreements with about eight companies, and these contracts are helping to ease concerns about price declines and even boost profitability. It explained that under current terms, 3- to 5-year contracts reflect price increases, which should make profitability even better.

Sandisk stressed that LTAs guarantee stable supply volumes and that early-stage strong penalty clauses help secure earnings stability.

When the memory market was in a downturn, news about the listing of China's ChangXin Memory (CXMT) weighed heavily on stock prices as a negative. Recently, however, reports that China's YMTC has risen to become the world's third-largest NAND maker, overtaking Samsung Electronics and SK hynix and even Sandisk, have not been reflected as a negative at all in the current market atmosphere. This shows how important overall market mood and investor sentiment are.

Its share had been just over 10%, but the Solidigm deal caused it to jump. With the gap between third-place Sandisk and fourth-place Kioxia narrow, and YMTC now joining the race, competition in the NAND market is intensifying further.

This is seen as an investment to strengthen its competitiveness in the NAND market.

Yesterday, Sandisk unveiled HBF (High Bandwidth Flash memory), a next-generation NAND flash technology, presenting it as a future growth driver. HBF stacks NAND like HBM (high bandwidth memory) and is specialized for achieving high bandwidth. Sandisk has said it is developing this HBF technology together with SK hynix, drawing attention.

Recently, foreign investors made large net purchases of SK hynix, bought heavily into Samsung Electro-Mechanics while selling Samsung Electronics. Institutional investors bought many stocks beyond Samsung Electronics and SK hynix, including Naver, Jusung Engineering, Wonik IPS, Robotis, and Cosmecca Korea. This shows capital flowing across a wide range of stocks in the market.

This means money is not concentrated in a particular sector or stock, but flowing in as buyers cycle through multiple industries.

SK Eternix has a target price of 66,000 won, while its current share price is 57,000 won. Its recent operating profit fell short of consensus (market forecasts), which is attributed to solar restructuring, deferred earnings, and the swing to a loss in its ESS business. However, fuel cell and wind projects are progressing smoothly, the change in largest shareholder has been completed, and expectations for its solar development business persist, so there are positive outlooks as well. SK Eternix is participating in every profitable renewable energy business, including wind, solar, and fuel cells.

Lotte Tour Development's second-quarter results matched consensus, with sales of 51.9 billion won, a solid performance. Drop-back and hold rates continued to rise, and the comp ratio exceeded 50% for the first time, reaching 52%. Despite these strong results, its forward PER has fallen below 8x, which is assessed as entering a significantly undervalued range. This is viewed as a historically low valuation level, reflecting excessive concerns priced into the market.

This suggests that the financial burden on related companies will not be significant.

Reports indicate that where spending was once concentrated in areas like Myeongdong, it is now spread more evenly across areas such as Seongsu-dong, Konkuk University, and Hongdae.

Operating profit came in at 47.2 billion won, exceeding the market expectation of 43.5 billion won. Despite rising raw material prices due to the war, it succeeded in keeping its cost ratio stable through loss-rate management. Its results were good, yet the share price fell, leaving a mix of disappointment and expectation.

The fact that Dalba Global's share price fell to around 18x suggests the stock was adjusted because of the valuation burden at 20x.

CEO Lee Kwon-hee advised investors who bought cosmetics stocks early to reduce their positions. From a rotation perspective, earnings may remain weak until monthly export data is confirmed, so share prices could come under pressure. He stressed that this is not a negative view on cosmetics stocks themselves, but that they may offer less relative appeal compared with other industries currently moving near the bottom. He added that investors could consider a trading strategy of buying again during a pullback rather than buying in a period of heightened market attention.