Samsung Securities said that the market's DRAM price outlook for the fourth quarter was wrong. The securities expected that mobile DRAM prices will remain same or go up slightly in the fourth quarter of this year.
"DRAM prices in the fourth quarter, which were expected to drop significantly, are almost flat," Samsung Securities said.
The securities said, "The market's opinions on short-term prices are often reflection of the major customers' desire. It's not a bad indicator reflecting for market research. However, if leveraging the indicatator continue to miss the outlook, using same method can be problematic."
Samsung Securities said, "If the customers wait, price of DRAM will definitely fall. There is a high risk that they may not secure the required quantity while waiting for the slight price cut. All customers are waiting for the price cut since it is the beginning of the fourth quarter and demand remains strong. A more balanced approach is needed if the outlook of a significant drop of DRAM was solely based on the customer's negotiation policy that originally aimed to lower the price."
"If SK Hynix, which pays more than 40% operating margin, is traded one times its net asset ratio (PBR), this proves that the market is indifferent to the controversy over the cycle," Samsung Securities said. "There are not many customers will not buy products which has the controversy over the cycle or price will fall. Mispricing will provide an opportunity for investors."
Reporter Lee Dong-hoon usinvestmentidea2020@gmail.com
