MOA: LOWERING THE TARGET PRICE OF SK HERCULES TO 2.75 MILLION WON, DEPENDING ON THE RECENT ADJUSTMENT AS A SILO OPPORTUNITY

ON 5 AUGUST, CHASE MORGAN PUBLISHED A REPORT THAT MAINTAINED OPTIMISM ABOUT THE FUTURE OF THE SK HERCULES AND STORAGE INDUSTRIES. THE CSP CLOUD END AND THE IA MODEL LABORATORY ' S INCREASED REVENUE KINETIC ENERGY INDICATES THAT RETURNS ON THE AI CAPITAL EXPENDITURE TREND ARE IMPROVING, AND THE BANK REMAINS OPTIMISTIC ABOUT THE LONGER AND LONGER-TERM SUSTAINABILITY ARGUMENT. HOWEVER, IN THE CURRENT MARKET ENVIRONMENT, THE PATH TO THE NORMALIZATION OF THE VALUATION MULTIPLIER WILL TAKE TIME. TAKING INTO ACCOUNT THE HIGHER OPPORTUNITY COSTS COMPARED TO THE PAST, THE BANK HAS REVISED THE TARGET MULTIPLIER DOWNWARDS TO SEVEN TIMES THE FORWARD 12 MONTH MARKET RATE, WHICH WAS EIGHT TIMES HIGHER, AND THE TARGET PRICE HAS BEEN REVISED DOWNWARDS FROM 3 MILLION WON TO 2.75 MILLION WON. IN 12 MONTHS, RISK PAY REMAINED FAVOURABLE, AND THE BANK CONSIDERED THE RECENT ADJUSTMENT TO BE A SILO OPPORTUNITY. THE SECOND QUARTER OF 2026 SAW A SLOWER INCREASE IN AVERAGE DRAM PRICES, WHICH LED INVESTORS TO QUESTION THE EXECUTION POWER OF SK HERCULES IN STORAGE; HOWEVER, THE BANK VIEWED THIS AS A ONE-TIME QUARTER, AND EXPECTED THAT THE AVERAGE DRAM PRICE TREND IN THE THIRD SEASON WOULD BE BETTER THAN THAT OF HIS COLLEAGUES, TOGETHER WITH AN INCREASE IN THE CONTRIBUTION OF HBM4, WOULD SUPPORT A HIGHER THAN INDUSTRY AVERAGE TREND IN MIXED DRAM PRICES. THE BANK ESTIMATED THAT THE THIRD AND FOURTH QUARTERS OF 2026 WOULD HAVE A PROFIT OF 78/93 TRILLION WON, RESPECTIVELY, WHICH IS BROADLY IN LINE WITH RECENT MARKET EXPECTATIONS。