UBS: SK Hynix has a price to book ratio of 1.66 times, with an implied ROE of less than 20%, but can actually earn 40% According to a report by UBS on July 29th, according to Tide Research, SK Hynix's stock price has fallen 52% from its high on June 22nd, with a current price to book ratio of only 1.66 times and an implied long-term ROE of 18.9%. But UBS predicts an average ROE of 40.2% from 2027 to 2031, a difference of 21 percentage points between the two. The growth rate of DRAM bit demand is expected to increase from 22% in 2026 to 36% in 2027, and HBM production capacity will increase from 230000 pieces/month by the end of 2026 to 270000 pieces/month by the end of 2027. SK Hynix will maintain a 48% shipment share in the HBM industry in 2026. UBS believes that the downward revision of market valuation lacks basis. AI intelligent agents are driving the acceleration of memory demand, and 10 long-term agreements have been signed. Although LTAs have suppressed ASP in the short term, they will benefit profit margins in the long term. UBS maintains a buy rating and has lowered its target price from KRW 3.2 million to KRW 3 million. It is expected to initiate approximately KRW 12 trillion in share repurchases in the second half of 2026, with 50% of its free cash flow going towards shareholder returns in the long term.