마이크론 목표가 155달러(2022.03.22)

2022.03.22

요약:Khaveen Investments는 데이터센터 부문의 성장으로 마이크론의 매출도 성장할 것이고

이에 마이크론의 목표가를 154.46달러로 제시하며 강력 매수로 추천.

3월22일 마이크론 주가는 79.12달러.

 

또 Khaveen Investments는 DDR5 채택률이 증가함에 따라 연도별 디램의 평균 판매 가격도

상승할 것으로 분석했다.

 

 

 

Micron Stock: Strong Buy Rating Even Stronger Now (NASDAQ:MU) | Seeking Alpha

 

 

Summary

• In this analysis, we examined Micron's NAND segment catering to the data center markets and projected its growth at a 4-year average rate of 26.2% driven by data volume growth.
• 이번 분석에서 데이터센터에 저장장치를 공급하는 마이크론의 낸드 부문을 조사했고,
• 낸드부문이  데이터의 증가에 힘입어, 4년간 연평균 성장률이 26.2%에 달할 것으로 예상되었다.
•  
• With the expected shift towards next gen DDR5 DRAM technology, we expect the transition to support DRAM ASP growth based on our analysis of a price premium of 165% compared.
•  
• Moreover, we forecasted its wafer capacity growth of 7.6% in 2022 and memory bit growth in line with our market demand growth projections.
•  
• As we raise our revenue projections, we raise our price target to $155, making our Strong Buy Rating even stronger.

 

In our previous analysis of Micron Inc. (NASDAQ:MU), we projected the DRAM demand growth broken down by each end market at an average of 18.8% through 2025 and ASPs to increase on average by 14.4% per year.

Additionally, we projected the NAND market by end market with demand growth of 28.35% through 2025

but ASPs contracting by -1.7% on average.

Moreover, we analyzed its revenue growth and determined pricing trends to be a key driver of revenue growth

and projected its revenue to grow by 22.4% in 2022 and 22.7% in 2023 and derived a price target of $116.04.

 

이전 분석에서, 우리는 2025년까지 디램의 수요 증가율은 연평균 18.8%이고 평균판매 가격 상승율은 연간 14.4%로 

예상했고,  낸드의 수요 증가율은 28.35% 평균판매 가격은 연간 1.7% 하락할 것으로 예상했다.

마이크론의 매출은 2022년 22.4%, 2023년에는 22.7% 증가함에 따라 목표가 116.04달러를 유출했다.

 

 

아래 그래프는 낸드 시장 점유율.

 

DRAMeXchange, TrendForce

 

In 2021, Micron remained as the fifth largest NAND market player despite its market share decreasing slightly towards the final two quarters, but its share remained above 10%.

 

2021년 마이크론의 글로벌 낸드 점유율은 조금 하락했지만 10%이상을 유지하면서 5위를 유지했다.

 

Whereas market leader Samsung (OTC:SSNLF) saw that its market lead had strengthened overall but moderated slightly towards the final quarter. The next largest players, Kioxia saw its market share moderate after a surge in 2021 while Western Digital (WDC) gained share. As SK Hynix planned to acquire Intel, its share increased over the past year as Intel’s (INTC) share declined. The Others category continued to gain share in 2021 following its strong growth in the prior year.

 

 

아래는 삼성전자, SK하이닉스와 마이크론의 분기별 디램 시장 점유율 그래프.

 

 

 

 

On the other hand, the company’s DRAM market share remained steady throughout 2021 following a slight increase in the prior year. Market leader Samsung strengthened its lead in the first 3 quarters of the year but its growth moderated by the final quarter.

Whereas SK Hynix, which trails behind Samsung, saw its share dip but recover towards the end of the year. Compared to the NAND market, the DRAM market exhibits an oligopolistic characteristic controlled by the top 3 companies while the Others have not gained significant ground in 2021 unlike in the NAND market.

 

한편 디램 시장에서 마이크론의 점유율은 전녀대비 조금 증가했다.

시장 리더인 삼성전자는 작년 3개분기동안 점유율이 상승했으나 마지막 분기는 하락했다.

반면에 하이닉스는 처음 3분기는 점유율이 하락했으나 마지막 분기에는 상승했다.

디램 시장은 낸ㄷ드 시장과 달리 더 과점적인 모습을 보였다.

 

In this analysis, we looked at the NAND market for data centers as Micron released its 176L NAND products for data centers. We projected its demand for NAND based on the enterprise SSD market driven by rising data volume.

 

이번 분석에서 우리는 마이크론이 데이터센터용 176단 낸드를 발매했듯이 데이터센터향 낸드 시장을 보았다.

증가하는 데이터 용량때문에 기업용 SSD 시장에 기반한 낸드 수요를 예상했다.

 

Moreover, we examined Micron’s launched DDR5 DRAM products. We analyzed whether the shift towards DDR5 could provide upside to DRAM ASPs by analyzing the price premium between DRAM generations.

Lastly, we examined the company’s expansion plans as it plans to invest $150 bln over the next 10 years in manufacturing and R&D and projected its wafer capacity growth based on management’s capex guidance.

Data Center NAND Demand Growth

Recently, Micron announced its 176-layer NAND SSDs for data centers. In our previous analysis on Micron, we broke down the NAND market by its end markets where ICT Infrastructure accounts for 23% of the NAND market, the third largest after Mobile and Consumer Electronics.

 

TrendForce, SIA, Khaveen Investments

 

According to CEO Sanjay Mehrotra in the company’s Q1 2022 earnings call, the company expects data center growth supported by data-intensive workloads and AI as well as the rise of SSDs. To project the growth of SSD shipments, we based our projection on the forecasted growth of data volumes through 2026 with an SSD shipment/Data Volume Growth Factor of 1.1 based on a 9-year average.

 

 

SSD Shipments	2018	2019	2020	2021	2022F	2023F	2024F	2025F	2026F
Data Volume	33	41	64.2	79	97	120	147	181	223
Growth % ('a')	26.9%	24.2%	56.6%	23.1%	22.8%	23.7%	22.5%	23.1%	23.0%
SSD/ Data Volume Growth Factor ('b')	0.5	1.4	0.5	0.8	1.1	1.1	1.1	1.1	1.1
SSD Shipments	47.8	64.38	83.275	99.44	123.5	154.5	191.4	238.4	296.6
Growth % ('c')	12.5%	34.7%	29.3%	19.4%	24.2%	25.1%	23.9%	24.5%	24.4%

* c = a x b

Source: Trendfocus, IDC, Seagate, Statista, Khaveen Investments

 

 

With the SSD shipments forecast, we updated our NAND market demand projections from the previous analysis for the ICT infrastructure segment in the table below.

NAND	2022F	2023F	2024F	2025F
Mobile Phones	34.4%	34.2%	34.2%	34.2%
Consumer Electronics	4.5%	4.5%	4.5%	4.5%
PCs	36%	38%	38%	38%
ICT Infrastructure	24.2%	25.1%	23.9%	24.5%
Industrials	1.70%	1.70%	1.70%	1.70%
Auto	85.6%	91.1%	84.5%	59.9%
Total NAND Shipment Growth %	28.6%	29.3%	28.5%	26.9%

Source: Khaveen Investments

 

 

Overall, with the forecasted rise of data volumes, we expect continued growth in the data center market boosting demand for SSDs. We revised our new projections for the ICT infrastructure segment and derived an average forward 4-year growth rate of 24.4% and believe Micron stands to benefit with the launch of its SSDs for data centers. In our previous analysis, we derived an average growth of 22%. The increase in our projection is due to the SSD shipments/Data volume growth factor (1.1) being higher than our previous analysis that incorporated the use of a cloud market capex/ cloud market revenue growth factor (0.79).

Previous Forecast	Cloud Infrastructure Market Revenue Growth (38%) = Data volume growth (23%) x Cloud Infrastructure Revenue Growth/Data Volume Growth (1.65) Total Market Capex Growth % (22%) = Cloud Market Capex/ Cloud Market Revenues (0.79) x Cloud Infrastructure Market Revenue Growth % (38%)
New Forecast	SSD Shipments (24.2%) = Data Volume Growth % (22.8%) x SSD Shipments/Data Volume Growth Factor (1.1)

Source: Khaveen Investments

 

Next-gen DRAM Products

For DRAM, Micron announced in 2021 that its next-gen LPDDR5X. In our previous analysis, we forecasted DRAM prices to grow based on the long-term trend line reaching $0.67/GB by 2025. According to Trendforce, DRAM prices are expected to rise in the second half of the year owing to factors such as the rising DDR5 penetration rate as well as the advent of its high seasonal demand

 

Yole Development

 

 

According to Yole Development, the shift towards DDR5 is expected to accelerate in the coming years and reach around 95% of the market by 2026. In terms of performance, DDR5 offers 6% better performance than DDR4 but at a high pricing premium according to Tom’s Hardware. To analyze the price difference between the different DRAM technologies, we compiled the DDR4 and DDR5 prices of DRAM listed on Amazon (AMZN) to obtain an average for each.

 

DDR4 DRAM	Price ($)	DDR5 DRAM	Price ($)
PNY XLR8	114.99	G.Skill	469.99
Corsair Vengeance RGB Pro	149.99	CORSAIR Dominator Platinum	344.84
Corsair Vengeance LPX	147.99	Corsair Vengeance C40	299.99
Teamgroup T-Force	118.99	Corsair Vengeance C40	309.99
G.Skill RipJaws V Series	149.99	CORSAIR Vengeance C36	369.99
Corsair Vengeance RGB Pro SL	158.79	XPG Lancer	399.12
		G.Skill Trident Z5	409.99
Average	140.12	Average	371.99
Increase %			165.5%

Source: Amazon, Khaveen Investments

 

Based on the table above, we calculated the average price difference between DDR4 and DDR5 to command a 165.5% price difference. Based on this, we estimated the change net impact on the change in pricing due to the shift towards DDR5 with the estimated increase in the share of DDR5 and decline in non-DDR5 memory which shows a 33% increase in 2022. However, according to MSI, the price premium between new DRAM generations decline over time and takes around 2 years to reach parity.

 

아래표는 DDR5의 연도별 채택률(점유율)과  다른 DDR제품의 점유율.

2022년의 DDR5의 채택률은 25%로 예상되며, 2023년에는 50%, 2026년에는 95%로 예상하였다.

 

DRAM Price Increase	2021F	2022F	2023F	2024F	2025F	2026F
Share of DDR5	5%	25%	50%	62%	77%	95%
Share Change ('a')		20%	25%	12%	15%	18%
Price Increase Factor ('b')	165.5%	165.5%	165.5%	165.5%	165.5%	165.5%
Non-DDR5	95%	75%	50%	38%	23%	5%
Share Change ('c')		-20%	-25%	-12%	-15%	-18%
Price Increase Factor ('d')	0%	0%	0%	0%	0%	0%
Net Price Increase ('e')		33%	41%	20%	24%	30%

*e = (a x b) + (c x d)

Source: Khaveen Investments

 

In our previous analysis, we attributed rising demand for DRAM as a factor for pricing growth and projected its ASP to reach $0.67/GB by 2025. We believe the shift towards DDR5 further supports our forecast for DRAM pricing to increase going forward with the existing price premium. For our overall DRAM market ASP growth forecast, we retained our projections from our past analysis based on the long-term trendline of DRAM pricing instead of relying solely on our derived forecast above due to other possible factors we believe could influence its pricing such as supply and demand factors.

 

이전 분석에서, 

 

 

IC Insights, Statista, Khaveen Investments

 

 

DRAM	2021F	2022F	2023F	2024F	2025F
ASP (8GB equivalent)	4.11	4.64	4.88	5.12	5.36
Change %	31.7%	12.9%	5.2%	4.9%	4.7%

Source: IC Insights, Statista, Khaveen Investments

 

 

Capacity Expansion and Bit Growth in Line with Industry Demand

In 2021, the company announced it is committing $150 bln in investments to expand its chip manufacturing and R&D over the next decade. In its latest earnings call, the company guided 2022 capex between $11 bln to $12 bln.

To project Micron’s wafer capacity, we based our forecasts on Micron’s guided capex at the midpoint in 2021 followed by its $150 investment plan assumed to be spread across 10 years equally. We calculated its historical wafer increment per year over capex at a 2-year average of 0.014 which we used to forecast its forward 5-year wafer increment to derive Micron’s wafer shipment growth.

Micron Wafer Growth	2018	2019	2020	2021	2022F	2023F	2024F	2025F	2026F
Micron Capex	-8.2	-10.1	-7.6	-10.6	-11.5	-15.0	-15.0	-15.0	-15.0
Wafer Increment/ Capex ($ mln)		0.015	0.012	0.014	0.014	0.014	0.014	0.014	0.014
Micron Wafer Capacity ('000s per month)	1685	1841	1931	2075.7	2232.8	2437.8	2642.7	2847.7	3052.7
Growth %		9%	5%	7%	8%	9%	8%	8%	7%
Wafer Increment		156	90	144.7	157.1	205.0	205.0	205.0	205.0

Source: Micron, IC Insights, Khaveen Investments

However, Micron’s management explained in the following quote that its bit growth will be from technology transition and 3D scaling instead of wafer capacity expansion.

For both DRAM and NAND, we plan to achieve bit supply growth with no transitions alone through the middle of the decade. Beyond this time horizon, we anticipate the need to add greenfield wafer capacity for DRAM. However, for our NAND supply growth, we expect continued 3D scaling to be sufficient to meet industry demand growth without the need for wafer capacity additions. – CEO Sanjay Mehrotra

Furthermore, the company guided its bit supply growth to be in line with industry demand for DRAM and NAND in 2022.

Micron's calendar year bit supply growth for DRAM and NAND will be in line with industry demand. – CEO Sanjay Mehrotra

Taking into account the company’s guidance for 2022, we forecasted its DRAM and NAND based on our market demand growth rate of 18.8% and 28.6% respectively in 2022. Additionally, we also factored in our ASP growth assumptions from our previous analysis. Going forward, we continued to forecast its revenue growth on our market demand growth forecast through 2023.

Micron Revenue Projection	2020	2021	2022F	2023F	2024F	2025F
DRAM	14.51	20.04	27.23	34.63	43.20	53.80
Growth %		38.1%	35.9%	27.2%	24.7%	24.5%
NAND	6.13	7.01	8.64	10.97	13.88	17.37
Growth %		14.3%	23.3%	27.0%	26.6%	25.1%
Others	0.79	0.66	0.85	0.85	0.85	0.85
Growth %			-17.0%	28.7%	0.0%	0.0%
Total	21.44	27.71	36.71	46.45	57.93	72.01
Total Growth %		29.3%	32.5%	26.5%	24.7%	24.3%

Source: Khaveen Investments

Overall, we forecast the company’s revenue growth for DRAM and NAND to increase in FY2022 by 32.5% followed by 26.5% in 2023 driven by market demand growth and our ASP forecasts.

Risks: Cyclical Memory Market

In 2021, the company’s management highlighted the PC components supply shortage which resulted in lower demand for its memory products. In its latest earnings call, the company provided positive guidance of the stabilization in the PC market but expects unit sales to be in line with the previous year. According to Morgan Stanley, memory customer inventories for DRAM products were building up and elevated in PC, server and communications markets.

Micron, Khaveen Investments

Given the cyclicality of the memory chip market, we conservatively took account of it in our forecast of the company’s revenues as discussed in our previous analysis with a growth rate assumption of -5%. This time, we adjusted its revenue growth contract by 18.2% based on its average revenue decline in the past 6 years where its revenues contracted.

Micron Revenue Forecasts ($ mln)	2019	2020	2021	2022F	2023F	2024F	2025F
Revenue	23,406	21,435	27,705	36,712	46,446	49,439	52,426
Revenue Growth	-22.98%	-8.42%	29.25%	32.51%	26.51%	6.44%	6.04%

Source: Micron, Khaveen Investments

Valuation

Overall, compared to our previous analysis, we updated our revenue projections for Micron in 2022 based on the market demand growth of DRAM and NAND as discussed in the third point where we forecasted the company’s memory shipment growth based on our market demand growth through 2025 resulting in a higher revenue growth projection at a 5-year forward average of compared to 9%. However, we conservatively accounted for the cyclicality of its business by adjusting its growth in 2024 and 2025 with the average decline in the past 6 years followed by the memory market CAGR onwards whereas in our previous analysis we assumed its revenues to contract by 5% per year.

Revenue Forecasts ($ bln)	2022F	2023F	2024F	2025F	2026F
Revenue (Old Forecast)	33.9	41.6	39.5	37.5	41.2
Growth %	22.4%	22.7%	-5.0%	-5.0%	9.8%
Revenue (New Forecast)	36.7	46.4	49.4	52.4	57.6
Growth %	32.5%	26.5%	6.4%	6.0%	9.8%

Source: Micron, Khaveen Investments

 

 

To value the company, we used a DCF analysis as we expect the company to continue generating positive FCFs going forward. Our terminal value is based on its perpetual growth terminal value with a discount rate of 10.8% less a growth rate assumption of 2.8% based on long-term GDP growth.

Based on a discount rate of 10.8% (company’s WACC), our model shows its shares undervalued by 112%.

Khaveen Investments

Compared to our previous analysis, our price target shows an increase to $154.46 from $116.04 with a higher revenue growth projection at a 5-year average of 16.3% compared to 9%.

Verdict

Following our previous coverage on Micron, we updated our revenue projections for its NAND business taking account of the company’s NAND SSD product launches for data centers where we projected its demand to grow at a forward average of 26.2% driven by rising data volumes. Moreover, we examined the transition of DRAM technologies towards DDR5 and analyzed its pricing premium compared to the previous gen based on listed product pricing on Amazon at 165% which we believe could support pricing growth for the DRAM market. Lastly, we examined its capex plans for 2022 which is an expected increase of 8.5% at the midpoint and forecasted its wafer capacity growth at 7.4% based on a wafer increment per capex factor assumption.

 

We then forecasted its shipment growth with our projections of DRAM and NAND demand based on management’s guidance of memory bit growth in line with industry demand. Overall, we rate the company as a Strong Buy with a price target of $154.46.