Investment Rating - The report maintains a "Buy" rating for the company, with a target price reflecting a potential upside of over 15% compared to the relevant market index [6]. Core Views - The company is expected to benefit from a stable growth in its 12-inch wafer business, with quarterly revenue surpassing $2 billion for the first time. The revenue for Q4 2024 is projected at $2.207 billion, representing a year-on-year increase of 31.5% [3][4]. - The gross margin for Q4 2024 is anticipated to exceed guidance, reaching 22.6%, which is higher than the expected range of 18%-20% [3][4]. - The company is optimistic about the impact of national subsidy policies starting January 2025, which are expected to stimulate demand for consumer electronics, particularly smartphones [3][4]. Financial Summary - **Revenue Projections**: The total revenue is expected to grow from $6.322 billion in 2023 to $11.589 billion by 2026, with year-on-year growth rates of -13%, 27%, 21%, and 20% respectively [3][4]. - **Net Profit**: The net profit attributable to shareholders is projected to decline from $903 million in 2023 to $493 million in 2024, before recovering to $1.027 billion by 2026 [3][4]. - **Gross Margin**: The gross margin is expected to fluctuate, with estimates of 19.26% in 2023, 18.03% in 2024, and improving to 20.96% by 2026 [3][4]. - **Earnings Per Share (EPS)**: EPS is projected to be $0.11 in 2023, dropping to $0.06 in 2024, and then increasing to $0.13 by 2026 [3][4]. Operational Insights - The company’s 8-inch wafer monthly production is expected to reach 948,000 units in Q4 2024, with a capacity utilization rate of 85.5% [3][4]. - The average selling price (ASP) for products is projected to increase by 6% quarter-on-quarter in Q4 2024, although a decline in ASP is anticipated in the second half of 2025 due to increased market supply [3][4]. - Capital expenditures are expected to remain stable in 2025, with depreciation expenses projected to increase by approximately 20% [3][4].

Investment Rating - The investment rating for the company is "Outperform the Market" (maintained) [1] Core Views - The company is expected to continue its revenue growth in Q1 2025, with a projected quarter-on-quarter increase of 6%-8%. The revenue for 2024 is estimated at $8.03 billion, representing a year-on-year growth of 27% [2][4] - The company achieved a record high in sales revenue of $2.207 billion in Q4 2024, with a year-on-year increase of 31.5% and a quarter-on-quarter increase of 1.7%. The gross margin for Q4 2024 was 22.6%, exceeding the guidance upper limit [2][4] - The increase in the proportion of 12-inch wafers is expected to drive up the average selling price (ASP) [3] Summary by Relevant Sections Financial Performance - The company reported a total revenue of $8.03 billion for 2024, with a gross margin of 18%. The net profit attributable to the parent company was $108 million, showing a year-on-year decrease of 38% [2][4] - The company’s Q4 2024 wafer shipments amounted to 199.18 million equivalent 8-inch wafers, with a capacity utilization rate of 85.5% [3] - The average price for 8-inch wafers increased to $1,025, reflecting a year-on-year increase of 10% [3] Revenue Composition - In Q4 2024, revenue from consumer electronics, industrial and automotive, and wearable devices all showed year-on-year growth, with respective increases of 130.9%, 41.3%, and 23.5%. Consumer electronics remained the largest revenue source, accounting for 40.2% of total revenue [4] - The revenue from China accounted for 89.1% of total revenue in Q4 2024, indicating an increase in contribution from this region [4] Capital Expenditure and Future Outlook - The capital expenditure for Q4 2024 was $1.66 billion, with an annual capital expenditure of approximately $7.33 billion for 2024. It is expected that capital expenditure will remain stable in 2025 [3][4] - The company is projected to achieve net profits of $493 million, $655 million, and $950 million for 2024, 2025, and 2026 respectively [4]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company is expected to continue outperforming its peers, driven by an enhanced competitive position in the domestic supply chain and diversified process platform capabilities. The projected net profits for 2025-2026 are $870 million and $1.07 billion, respectively, with a new forecast for 2027 at $1.27 billion, reflecting year-on-year growth rates of 76.7%, 23.3%, and 18.6% [5] - The current stock price of HKD 46 corresponds to price-to-earnings (P/E) ratios of 54.0, 43.8, and 37.0 for 2025-2027, and price-to-book (P/B) ratios of 2.0, 1.9, and 1.7 for the same periods [5] Financial Performance Summary - For Q4 2024, the company reported revenue of $2.2 billion, a quarter-on-quarter increase of 1.7%, with a gross margin of 22.6%, exceeding market expectations [6] - The company anticipates a revenue growth of 6%-8% for Q1 2025, driven by increased demand from downstream sales and inventory replenishment [7] - The projected revenue for 2025 is expected to reach $10 billion, representing a year-on-year growth of 25% [7] Financial Metrics and Valuation Indicators - Revenue and net profit forecasts for the upcoming years are as follows: - 2023: Revenue of $6.32 billion, Net profit of $903 million - 2024: Revenue of $8.03 billion, Net profit of $493 million - 2025: Revenue of $9.95 billion, Net profit of $871 million - 2026: Revenue of $11.22 billion, Net profit of $1.07 billion - 2027: Revenue of $12.43 billion, Net profit of $1.27 billion - The gross margin is projected to improve from 19.3% in 2023 to 25.8% in 2027 [8]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Insights - The company is expected to continue outperforming its peers, with projected net profits of 870 million USD, 1.07 billion USD, and 1.27 billion USD for 2025, 2026, and 2027 respectively, indicating year-on-year growth rates of 76.7%, 23.3%, and 18.6% [5] - The current stock price of 46 HKD corresponds to price-to-earnings (P/E) ratios of 54.0, 43.8, and 37.0 for 2025, 2026, and 2027, and price-to-book (P/B) ratios of 2.0, 1.9, and 1.7 for the same years [5] - The company is expected to benefit from an improved position in the domestic supply chain, which is anticipated to drive a stable upward trend in its fundamentals [5] Financial Performance Summary - For Q4 2024, the company reported revenues of 2.2 billion USD, a quarter-on-quarter increase of 1.7%, with a gross margin of 22.6%, exceeding market expectations [6] - The company achieved a net profit of 110 million USD in Q4 2024, a quarter-on-quarter decline of 28% [6] - The revenue forecast for 2025 is projected to grow by 25%, reaching 10 billion USD, outperforming the average growth rate of 4%-9% in the semiconductor manufacturing industry [7] Valuation Metrics - The company's revenue for 2023 was 6.32 billion USD, with a year-on-year decline of 13.1%, while 2024 revenue is expected to grow by 27% to 8.03 billion USD [8] - The gross margin is projected to improve from 19.3% in 2023 to 21.9% in 2025, with net profit margins increasing from 14.3% in 2023 to 8.7% in 2025 [8] - The estimated earnings per share (EPS) for 2025 is 0.11 USD, with a P/E ratio of 54.0 [8]

Investment Rating - The report suggests a positive outlook for the company, indicating that it is advisable to actively monitor the stock due to its potential for long-term growth [4]. Core Insights - The company reported a sales revenue of over $2.2 billion in Q4 2024, with a quarter-on-quarter growth of 1.7% and a gross margin of 22.6%, which is an increase of 2.1 percentage points [1]. - For the full year 2024, the company achieved a sales revenue of $8.03 billion, representing a year-on-year growth of 27%, with a gross margin of 18% [1]. - The company’s capital expenditure for 2024 was $7.33 billion, with an end-of-year capacity of 948,000 8-inch wafers and a total shipment of over 8 million wafers, resulting in an average capacity utilization rate of 85.6% [1]. Summary by Sections Sales and Revenue Outlook - The company expects a sales revenue growth of 6-8% quarter-on-quarter for Q1 2025, with gross margins projected between 19% and 21% [2]. - Factors contributing to this growth include domestic subsidies for consumer electronics, a shift towards localized semiconductor production, and efforts by downstream companies to mitigate global tariff risks [2]. Automotive Segment Growth - The automotive product line is anticipated to become a significant revenue contributor, potentially accounting for 10% of the company's total revenue, which corresponds to about one-third of the domestic automotive market demand [3]. Long-term Growth Potential - The report emphasizes the strengthening trend of localized semiconductor production in China, driven by substantial demand in sectors such as electric vehicles, mobile phones, home appliances, and robotics [4]. - The company has made significant investments in supply chain stability and technology upgrades, enhancing its ability to meet domestic demand and positioning itself for sustained long-term growth [4].

Investment Rating - The investment rating for the company is downgraded to Neutral [1][6][38] Core Views - The stock price may have fully reflected the upside potential, leading to the downgrade in rating. Despite a positive outlook on the domestic substitution trend in wafer foundry and the company's leading position in the industry, investors should consider high capital expenditures, downstream demand uncertainties, and increased competition in mature processes [6][7][9] - The target price is raised to HKD 48, reflecting a 2.25x price-to-book ratio for 2025, accounting for improved market liquidity and a reassessment of technology stocks [6][9][12] Financial Overview - Revenue projections for the company are as follows: - 2023: USD 6,322 million - 2024: USD 8,030 million - 2025E: USD 9,414 million (up from previous estimate of USD 9,094 million) - 2026E: USD 10,291 million - 2027E: USD 11,238 million [5][20][40] - Net profit estimates are: - 2023: USD 903 million - 2024: USD 493 million - 2025E: USD 1,055 million - 2026E: USD 1,348 million - 2027E: USD 1,778 million [5][20][40] - The company’s gross margin is projected to improve to 20.9% in 2025, up from 20.1% previously estimated [20][40] Market Performance - The stock has increased approximately 200% since the second half of 2024, driven by improved fundamentals and increased market liquidity [6][7][9] - The company’s market capitalization is approximately HKD 287,213 million, with a 52-week high of HKD 47.95 and a low of HKD 14.02 [3][6] Capital Expenditure - The company has guided for capital expenditures of USD 7.33 billion in 2024, with expectations to maintain similar levels in 2025, which is higher than previous market expectations [6][7][9] - The capital expenditure as a percentage of revenue is projected to remain high, indicating a focus on expansion despite potential impacts on gross margins [6][7][9] Valuation Metrics - The company’s price-to-book ratio is currently at 2.2x, which is significantly above the historical average of 1.0x, indicating a high valuation relative to its peers [6][9][12] - The relative premium of the A-shares over H-shares is currently at 142%, which is at the historical lower bound compared to an average of 199% [6][9][19]

Investment Rating - The report downgrades the investment rating for the company to Neutral from Buy, indicating that the stock price may have fully reflected the potential upside [6][7][19]. Core Views - The report highlights that while the company's performance may continue to improve, the stock price has already anticipated these changes. The long-term outlook remains positive due to the trend of domestic substitution in the wafer foundry industry and the company's leading position in the market [6][7][19]. - The report emphasizes the high capital expenditure and its potential impact on profit margins, as well as uncertainties in downstream demand and increased competition in mature processes affecting product pricing [6][7][19]. Financial Overview - Revenue projections for the company are as follows: - 2023: $6,322 million - 2024: $8,030 million - 2025E: $9,414 million - 2026E: $10,291 million - 2027E: $11,238 million - Year-on-year growth rates are projected at -13.1% for 2023 to 2024, 27.0% for 2024 to 2025, and 17.2% for 2025 to 2026 [5][39]. - Net profit estimates are: - 2023: $903 million - 2024: $493 million - 2025E: $1,055 million - 2026E: $1,348 million - 2027E: $1,778 million - The report notes a significant drop in earnings per share (EPS) for 2024, with a recovery expected in subsequent years [5][39]. Market Performance - The company's stock price has increased approximately 200% since the second half of 2024, driven by improved fundamentals and increased market liquidity [6][7][19]. - The target price for the company's stock is raised to HKD 48, reflecting a price-to-book (P/B) ratio of 2.25 times for 2025, which is considered high compared to historical averages [6][7][19]. Capital Expenditure - The company has guided for capital expenditures of $7.33 billion for 2024, with expectations for 2025 to remain at similar levels, which is higher than previous market expectations [6][7][19]. - The report indicates that the company plans to expand its 12-inch wafer capacity by 50,000 pieces annually, despite the high capital expenditure [6][7][19]. Valuation Comparison - The report compares the company's valuation metrics with peers, noting that the company's P/B ratio is above the industry average, indicating a premium valuation despite lower return on equity (ROE) compared to competitors [6][7][19]. - The report also highlights that the premium of the company's A-shares over H-shares is currently at 142%, which is at the historical lower end of the range [6][7][19].

Financial Data and Key Metrics Changes - In Q4 2024, the company reported sales revenue of $2.207 billion, a sequential increase of 1.7% [2] - The gross margin for Q4 2024 was 22.6%, up 2.1 percentage points [2] - For the full year 2024, sales revenue reached $8.03 billion, a year-over-year increase of 27% [5][6] - The gross margin for 2024 was 18%, down 1.3 percentage points year-over-year due to increased depreciation [5][6] - Capital expenditure for 2024 was $7.326 billion [2][10] Business Line Data and Key Metrics Changes - Revenue from 12-inch wafers accounted for 77% of total wafer revenue, with a year-over-year increase of 35% [6][7] - Revenue from 8-inch wafers accounted for 23% of total wafer revenue, also showing growth [7] - Revenue by application showed significant increases in consumer electronics, smartphones, and automotive sectors [6][8] Market Data and Key Metrics Changes - Revenue distribution by region: China (85%), America (12%), and Eurasia (3%) [6][7] - Revenue from Chinese customers increased by 34% year-over-year, driven by localized manufacturing demand [7] Company Strategy and Development Direction - The company is focusing on enhancing supply chain security and reliability in response to geopolitical changes [12][13] - Continuous high investment is aimed at meeting the growing demand for localized manufacturing [12][13] - The company plans to maintain capital expenditure at a similar level to the previous year, around $7.5 billion [12][21] Management's Comments on Operating Environment and Future Outlook - The semiconductor market is showing signs of recovery, with inventory levels returning to healthy status [5][11] - Management expressed concerns about external uncertainties in the second half of 2025, alongside intensifying competition [11][12] - The company anticipates a revenue growth rate higher than the industry average for 2025 [12][13] Other Important Information - The company achieved a monthly capacity of 948,000 standard logic 8-inch equivalent wafers by the end of 2024, with an annualized capacity utilization rate of 85.6% [10] - The company is actively expanding its technology platforms to enhance product performance and meet customer needs [8][9] Q&A Session Summary Question: What were the reasons for the ASP increase in Q4? - The ASP increase was attributed to a higher proportion of 12-inch wafers and a reduction in lower-priced commodities during the seasonal downturn [15][16] Question: How does the company view the impact of consumer stimulus policies? - Management noted that stimulus policies could lead to a 15% to 20% increase in demand, particularly in consumer electronics [34][35] Question: What is the outlook for depreciation and gross margin in 2025? - Depreciation is expected to increase by around 20% in 2025, which will continue to pressure gross margins [33][34] Question: How does the company plan to manage pricing pressures? - The company aims to enhance core competitiveness through technology advancements and strategic customer partnerships, maintaining a consistent pricing strategy [13][14]

Financial Performance - In Q4 2024, the company's sales revenue was $2,207.3 million, a 1.7% increase from Q3 2024 and a 31.5% increase from Q4 2023[5]. - The gross profit for Q4 2024 was $499.0 million, up 12.3% from Q3 2024 and up 81.5% from Q4 2023[5]. - The gross margin for Q4 2024 was 22.6%, compared to 20.5% in Q3 2024 and 16.4% in Q4 2023[5]. - The unaudited full-year sales revenue for 2024 was $8,029.9 million, a 27% increase compared to $6,321.6 million in 2023[5]. - The unaudited profit attributable to shareholders for 2024 was $492.7 million, a decrease of 45.4% from $902.5 million in 2023, primarily due to declines in investment and financial income[5]. - The net profit for Q4 2024 was $270.9 million, a 21.4% increase from Q3 2024 and a 14.2% increase from Q4 2023[16]. - The company reported a net income of $270.9 million for Q4 2024, with an EBITDA of $1,279.9 million, reflecting a profit margin of 12.3%[26]. - The net profit for the three months ending December 31, 2024, was $270,946, compared to $223,270 for the previous quarter, representing a growth of approximately 21.3%[44]. - Net profit for Q4 2024 was $270,946 thousand, compared to $223,270 thousand in Q3 2024, representing a growth of 21.3%[35]. Sales and Shipment - Q4 2024 wafer sales totaled 1,991,761 units, a decrease of 6.1% from Q3 2024, but an increase of 18.9% year-over-year[20]. - The company’s revenue from the China region accounted for 89.1% of total revenue in Q4 2024, up from 86.4% in Q3 2024[18]. Capital Expenditures and Utilization - The company reported a capital expenditure of $7,333 million for 2024, with an average capacity utilization rate of 85.6%[7]. - Q4 2024 capital expenditures amounted to $1,660.1 million, significantly higher than Q3 2024's $1,178.8 million, with total capital expenditures for 2024 projected at approximately $7.33 billion[21]. - The total shipment volume for 2024 exceeded 8 million wafers, with an end-of-year capacity of 948,000 8-inch equivalent wafers per month[7]. Cash Flow and Liquidity - Cash and cash equivalents increased to $6,364,189 thousand in Q4 2024 from $3,651,385 thousand in Q3 2024, representing a growth of 74%[30]. - Operating cash flow net income for Q4 2024 was $1,449,842 thousand, up from $1,236,416 thousand in Q3 2024, an increase of 17.2%[32]. - The cash ratio improved to 0.7 in Q4 2024, compared to 0.5 in Q3 2024, indicating better liquidity management[27][28]. - The net cash generated from operating activities increased to $1,449,842 from $1,236,416, reflecting a rise of about 17.2%[44]. - The net cash used in investing activities improved to $(207,300) from $(1,345,115), showing a reduction in cash outflow by about 84.6%[44]. - The company reported a net cash inflow from financing activities of $1,614,792, compared to a net cash outflow of $(97,009) in the previous quarter[44]. Debt and Equity - Total debt to equity ratio improved to 36.4% in Q4 2024 from 33.1% in Q3 2024, indicating a stronger capital structure[30]. - The company reported a net debt of $(3,367,023) thousand in Q4 2024, compared to $(2,237,335) thousand in Q3 2024, indicating a decrease in net debt[30]. - Borrowings increased significantly to $1,658,024 from $127,683, marking a substantial rise of approximately 1202.5%[44]. Research and Development - Research and development expenses increased to $217,035 thousand in Q4 2024 from $179,386 thousand in Q3 2024, a rise of 21%[35]. Other Income and Expenses - Other income for Q4 2024 was $140.8 million, a 92.9% increase from Q3 2024's $73.0 million[24]. - Q4 2024 operating expenses were $284.5 million, up 3.7% from Q3 2024, primarily due to increased expenses related to new plant operations[23].

Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 32.00, indicating a potential upside of 19.63% from the current stock price of HKD 26.75 [1][3]. Core Insights - The company's revenue for Q3 2024 reached USD 2.17 billion, representing a year-on-year growth of 34.0% and a quarter-on-quarter increase of 14.2%, aligning with market expectations [1]. - The production capacity utilization rate has improved to 90.4%, up 13.3 percentage points year-on-year and 5.2 percentage points quarter-on-quarter [1]. - The average selling price (ASP) of wafers reached USD 966, showing a slight year-on-year increase of 0.5% and a quarter-on-quarter rise of 15.5% [1]. - The company anticipates a revenue increase of 0%-2% for Q4 2024, projecting revenue between USD 2.17 billion and USD 2.21 billion, which is above market consensus [1]. - The AI sector is expected to be a major growth driver in the coming year, with domestic substitution demand gradually being released [1]. Summary by Sections Financial Performance - Q3 2024 operating profit was USD 170 million, a year-on-year increase of 94.4%, while net profit attributable to shareholders grew by 58.3% to USD 150 million, with a net profit margin of 6.9% [1]. - The company’s gross margin improved by 6.6 percentage points to 20.5% quarter-on-quarter [1]. - The projected revenue for 2025 is expected to grow by 28.1% year-on-year, reaching USD 8.1 billion [1]. Capacity and Demand - The company plans to add an average of 50,000 pieces of 12-inch wafer capacity annually, with new orders primarily coming from AI edge products [1]. - The total monthly capacity is expected to reach 920,000 equivalent 8-inch wafers by 2025 [1]. Market Position - The company currently holds a 5.5% share in the global wafer foundry market, which is projected to increase to 8.0% by the end of the year [1]. - The report highlights that one-third of the supply chain is expected to complete domestic substitution in the long term [1].