JPMorgan initiates coverage of SK Hynix ADR: trading at a 20% discount to U.S. peers, with current valuation deemed very cheap.

JPMorgan has initiated coverage of SK Hynix’s American Depositary Receipts (ADRs) with an Overweight rating and a target price of $245, implying approximately 32% upside from the current share price of $185.55. JPMorgan believes the AI-driven memory upcycle will last more than five years. Leveraging its leadership in HBM technology and long-term supply agreements (LTAs) that ensure earnings visibility, SK Hynix possesses significant potential for valuation re-rating. According to Wind Trading Desk, JPMorgan analyst Jay Kwon noted in his report that SK Hynix’s ADR currently trades at roughly a 20% discount to U.S. peer Micron—a gap difficult to justify on fundamental grounds. SK Hynix matches or even surpasses Micron in DRAM profitability, absolute scale, and HBM execution capability. JPMorgan expects this valuation discount to gradually narrow as the ADR listing improves global investor access, enhances liquidity, and increases disclosure frequency. Regarding shareholder returns, SK Hynix raised its shareholder return policy in August 2026—from “up to 50% of cumulative free cash flow (FCF)” to “more than 50%”—and announced a 40-trillion-KRW share buyback and cancellation program. JPMorgan forecasts a cumulative total shareholder return (TSR) yield of approximately 41.8% for fiscal years 2026–2028, which should strongly support valuation and shift market perception of SK Hynix from cyclical to structurally growth-oriented. Valuation rationale: Coexistence of ADR premium and discount to U.S. peers JPMorgan sets its $245 target price for June 2027, based on a 7x forward P/E multiple applied to SK Hynix’s local shares (000660.KS) FY26–FY27 average EPS, plus a 20% ADR premium. This premium is benchmarked against TSMC’s ADR premium relative to its local shares since the hardware sector rally began in 2024, driven by AI-related capital expenditures. Since its July 2026 U.S. listing, SK Hynix’s ADR has traded at an average premium of ~32%, currently around 30%, reflecting strong global investor demand for this AI memory chipmaker. JPMorgan attributes the sustained high premium to structural factors—including limited ADR float (currently only 2.5% of total shares outstanding) and stringent Korean regulatory restrictions on converting local shares into ADRs. Nonetheless, SK Hynix ADR currently trades at a forward P/E of 5.8x, versus Micron’s 6.5x—representing an ~11% discount. JPMorgan notes that Micron historically commands a ~17% valuation premium, primarily attributable to its U.S.-based investor base, passive fund inflows, and deeper derivatives markets—not superior cyclical profitability or shareholder return policies. With SK Hynix’s Nasdaq listing, these structural frictions are expected to ease, narrowing the valuation discount. AI cycle durability: Memory upcycle poised to exceed four years for the first time JPMorgan maintains its “higher-for-longer” view on the memory upcycle, projecting that the current DRAM average selling price (ASP) uptrend—initiated in Q1 2024—will extend beyond Q4 2028, delivering over 20 consecutive quarters of positive ASP growth. This far exceeds the historical norm of 7–8 quarters of upward momentum.

Report: SK Hynix plans U.S. ADR listing, to raise KRW 10–15 trillion via new share issuance, fully accelerating HBM capacity expansion.

SK Hynix is advancing plans to list in the U.S., aiming to raise capital through a new share issuance structured as American Depositary Receipts (ADRs) on U.S. capital markets. Proceeds will be fully dedicated to expanding high-bandwidth memory (HBM) production capacity and building AI infrastructure. According to Korea Economic Daily’s March 23 report, the new share issuance will account for approximately 2.4% of SK Hynix’s total outstanding shares, with projected proceeds ranging between KRW 10 trillion and KRW 15 trillion. SK Group Chairman Choi Tae-won publicly confirmed the company’s consideration of an ADR listing during NVIDIA’s annual developer conference, GTC 2026, held on March 16. The strategic significance of this listing extends well beyond fundraising. Industry observers note that the ADR listing could provide SK Hynix with an opportunity to reassess its valuation—currently trading at a P/E ratio of ~5.7x, roughly half of Micron Technology’s 12.1x. Successful inclusion in major global indices—such as the Philadelphia Semiconductor Index (SOX)—could also trigger substantial passive fund inflows. Treasury stock cancellation precedes new share issuance SK Hynix’s decision to issue new shares rather than utilize treasury stock stems from specific circumstances. The company had previously considered launching its ADR program using its existing ~2.4% treasury stock holdings. However, this approach drew market skepticism, with concerns that it might allow SK Hynix to circumvent mandatory treasury stock cancellation obligations. To address external concerns, the company proactively canceled ~2.1% of its treasury stock on the 9th of last month—valued at approximately KRW 12.24 trillion—leaving no remaining treasury shares available. Against this backdrop, SK Hynix shifted strategy and opted to issue new shares for its ADR listing. The planned issuance size—~2.4% of total shares outstanding—is broadly equivalent to the proportion of treasury stock recently canceled.

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