SK Hynix's Nasdaq Listing Could Lift Valuation By 20% And Narrow Gap With Micron, HSBC Says

• HSBC stated that it expects SK Hynix’s price-to-book ratio to rise to 3.4 from 2.8 following the Nasdaq listing.
• The firm said in its note that its outlook for SK Hynix now reflects “more proactive shareholder-friendly initiatives and improved accessibility to global investors.”
• HSBC added that Micron has traded at an average premium of 35% to SK Hynix over the last 13 years due to better access to U.S. investors and a more shareholder-friendly policy.

SK Hynix Inc.’s (SKHY) upcoming listing on the Nasdaq could help lift the company’s valuation by 20% and narrow the long-standing gap with rival memory manufacturer Micron Technology Inc. (MU), analysts at HSBC said.

According to a CNBC report citing an HSBC note, Micron has benefited from access to U.S. capital, helping it increase its valuation relative to SK Hynix.

Micron shares were down nearly 6% in Friday’s pre-market trade.

Why HSBC Is Bullish On SKHY

Explaining its bullish outlook on SK Hynix ahead of the Nasdaq listing of its American Depository Receipts (ADRs), HSBC stated that it expects the memory maker’s price-to-book ratio to rise to 3.4 from 2.8 following the listing.

HSBC said in its note that its outlook for SK Hynix now reflects “more proactive shareholder-friendly initiatives and improved accessibility to global investors.”

The firm stated that Micron has traded at an average premium of 35% to SK Hynix over the last 13 years due to better access to U.S. investors and a more shareholder-friendly policy. HSBC also cited a higher beta for Micron due to a smaller earnings base as another driver for its relatively premium valuation compared to SK Hynix.

The firm also hiked its price target for SK Hynix to 4 million Korean won, from 2.9 million, citing the upcoming Nasdaq listing as the catalyst.

How Much Is SKHY Planning To Raise?

SK Hynix filed its prospectus with the U.S. Securities and Exchange Commission (SEC) earlier this week.

According to a Reuters report, the company plans to raise $29.4 billion from the Nasdaq listing, with its ADRs priced at $166 each.

SK Hynix intends to use the proceeds from the listing to undertake the construction of production facilities in South Korea. It also plans to acquire Extreme Ultraviolet Lithography (EUV) scanners used in semiconductor production.

MU stock is up 325% year-to-date and 854% over the past 12 months. The Roundhill Memory ETF (DRAM) is up 185% over the past 12 months, while the iShares Semiconductor ETF (SOXX) is up 164%.

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