I can tell you this for sure, my $700 Marantz NR1200 2.1 Receiver has a DSD DAC which is in one word Superb, easily on par with my Parasound P6 and OPPO-205 DACs. So, I'd expect a great sound coming from the 40n's DAC too. At any rate, what impresses most is the 40n's HDMI input permits play of stereo SACD DSD output from the Sony UBP-X800Mk2. I imagine that this connection would get all there is from a Stereo SACD to get, since my lowly NR1200's DAC processes DSD as well as my Parasound P6 and OPPO-205. BTW, what external DAC are you acquainted with which has an HDMI input?
I read your posts on that before, that's good for you. But if you had read my previous posts, you would know that I prefer external DAC are: a) For the ability to play more variety of files in terms of bit rate, bit depth, sampling frequencies, b) For better value, integrated amps typically (there are exceptions of course) take advantage of people who has the tendency to believe more on marketing info and internet hearsay and would likely be willing to pay more for those build in DACs, and c) For flexibility and portability. They is of course not a factor except to those who have multiple systems in the same home.
So it is an easier way for them to maximize profit margin but incorporating relatively low cost DACs.
As far as the NR1200's being in par with the Oppo-205's, that is expected
if you are comparing in direct mode using analog input, because while the Oppo or even the P6 (but again my comments are not about sound quality) have more impressive specs, considering 99% of the users would make claims based on only subjective reviews by others or their own so we will get a good spectrum of opinions.
The fact is, you can get a low cost (below $150 for sure, some cost less..) external DAC that can play any files you can buy from the likes of HDTracks.com, NativeDSD.com and a few others. The P6's are slightly limited that way, and the NR1200 even more limited.
My dedicated external DACs don't have HDMI connections. I do have a Sony BDP and two (Oppo and Denon) universal players to play SACD, though I rarely use them as I find it much easier, therefore more enjoyable to play files I purchased from HDtracks, NativeDSD and a couple other ones. I do have quite a collection of SACDs/DVDAs mostly collecting dust.
Edit: must have typed it on my mobile phone and without glasses, had to fix a few thing so hopefully it is now at least comprehensible.
