Kioxia Sees 80% Profit Margin as JPMorgan Raises Target Price to ¥155,000

Kioxia's first-quarter profit margin has reached an impressive 75%, with guidance for the second quarter nearing 80%. The company's revenue in the first quarter was approximately ¥1.77 trillion, a year-on-year increase of 415.5% and a quarter-on-quarter increase of 76.2%. This significant growth is primarily driven by increased demand from enterprise SSD and data center customers.

The average selling price (ASP) for Kioxia's Datacenter & Enterprise division has seen a notable 70% quarter-on-quarter increase, while bit shipments have only experienced low single-digit growth. This trend indicates that the company's profit margins are being driven not just by increased sales volume, but also by enterprise SSD price hikes and product structure enhancements.

JPMorgan Chase has raised its target price for Kioxia to ¥155,000, significantly higher than the current stock price of about ¥46,500. This valuation is based on assumptions of continued NAND price recovery, enterprise SSD demand growth, and capital discipline. However, the analysts also caution that if demand weakens or production ramps up again, this valuation framework will be reassessed.

Kioxia has announced an up to ¥800 billion share buyback program to support its stock price expectations. This move is seen as a positive signal for shareholder returns and has alleviated some market concerns about storage manufacturers facing oversupply issues.