Core Viewpoint - Goldman Sachs reports that Huahong Semiconductor (01347), as a leading foundry in China, is expected to benefit directly from the demand recovery trend, with solid gross margin improvement and optimized capacity utilization indicating stronger earnings per share growth potential [1] Group 1: Company Performance - Goldman Sachs maintains a "Buy" rating on Huahong Semiconductor and raises the target price from HKD 117 to HKD 134 [1] - The company is anticipated to remain on an upward trend, supported by factors such as customer preference for local foundries and the increasing market share of fabless companies in the global supply chain [1] - The semiconductor industry's supply-demand relationship in China is improving, contributing to structural growth opportunities [1] Group 2: Capacity and Revenue Outlook - With the next factory advancing to the 28/22nm process node, capacity is expected to continue expanding, indicating a long-term upward trend in average selling prices [1] - Recent signs of price increase momentum have led Goldman Sachs to raise Huahong's earnings forecasts for 2027 to 2029 by 1%, based on a more optimistic revenue outlook [1] - Revenue growth is projected to be stronger due to the demand for specialized technology chips, such as power management ICs and image sensors, benefiting from the growth of AI servers and AI smart edge devices [1] - With sustained high capacity utilization, there is more room for Huahong to optimize its order structure, leading to stronger revenue and profit performance [1]

Core Viewpoint - Goldman Sachs has issued a report indicating that Hua Hong Semiconductor (01347), as a leading foundry in China, is expected to benefit directly from the recovery in demand, with improved gross margins and optimized capacity utilization showing stronger potential for earnings per share growth [1] Group 1: Company Performance - Goldman Sachs maintains a "Buy" rating on Hua Hong Semiconductor and has raised the target price from HKD 117 to HKD 134 [1] - The company is anticipated to remain on an upward trend, supported by factors such as customer preference for domestic foundries and the increasing market share of fabless companies in the global supply chain [1] - The semiconductor industry's supply-demand dynamics in China are improving, and the expansion of capacity as the next factory moves towards the 28/22nm process node indicates a long-term upward trend in average selling prices [1] Group 2: Financial Projections - Recent signs of price increase have led Goldman Sachs to adjust its earnings forecasts for Hua Hong from 2027 to 2029 upwards by 1%, based on a more optimistic revenue outlook [1] - Revenue projections for 2027 to 2029 have been revised up by 1% to 2%, with expectations of stronger growth driven by demand for specialized technology chips, such as power management ICs and image sensors, benefiting from the growth of AI servers and AI edge devices [1] - With sustained high capacity utilization, there is more room for Hua Hong to optimize its order structure, leading to stronger revenue and profit performance [1]

Group 1 - The Hang Seng Tech Index has returned above the 20-day moving average, indicating a short-term bullish trend, with notable stock movements from major companies like Baidu, Alibaba, Bilibili, Kuaishou, SMIC, Hua Hong Semiconductor, and Li Auto [1] - Since October of last year, Hong Kong tech assets have been under pressure due to structural industry differences, negative impacts from delivery subsidies, and year-end liquidity constraints. However, these factors are expected to improve by 2026, driven by AI industry growth, a cycle of overseas interest rate cuts, foreign capital inflows, and the return of southbound funds, suggesting a potential rebound for undervalued Hong Kong tech stocks [1] - Year-to-date, southbound funds have seen a cumulative net inflow of nearly 68 billion HKD into the Hong Kong stock market. Looking ahead to 2026, domestic AI models like DeepSeek are expected to launch around the Chinese New Year, while major domestic companies are increasing capital expenditures to enhance overall model capabilities [1] Group 2 - The National Securities Hong Kong Stock Connect Technology Index includes biotech leaders such as BeiGene, Innovent Biologics, and WuXi Biologics, currently trading at a rolling P/E ratio of only 27 times, which is below the 50th percentile of the past decade, indicating significant mean reversion potential [2]

Core Viewpoint - The semiconductor industry in China is experiencing a significant influx of companies going public in Hong Kong, reflecting strong financing needs and growing confidence in the domestic semiconductor sector [1][3]. Group 1: IPO Activity - Four semiconductor companies have completed their IPOs in Hong Kong since January, including Shanghai Birun Technology Co., Ltd., Shanghai Tianxu Zhixin Semiconductor Co., Ltd., OmniVision Technologies, Inc., and Zhaoyi Innovation Technology Group Co., Ltd. [1] - Over 40 additional semiconductor companies, including ChipX Technology Co., Ltd., are accelerating their IPO processes in Hong Kong, covering various segments of the semiconductor supply chain [1][2]. - As of January 22, more than 300 companies are still in the IPO queue for the Hong Kong market, indicating robust interest in semiconductor listings [2]. Group 2: Investor Confidence - The IPOs of the aforementioned companies have attracted high-quality cornerstone investors, including international long-term funds and venture capital firms, showcasing market confidence in leading domestic semiconductor firms [1][2]. - Notable cornerstone investors for OmniVision include UBS Asset Management (Singapore), Huajin Communications, and others, while Zhaoyi Innovation has attracted 18 cornerstone investors, including the Greater Bay Area Development Fund [2]. Group 3: Market Dynamics - The Hong Kong market tends to assign higher valuation premiums to quality companies, as evidenced by various industry cases [2]. - International long-term funds from Europe, the Middle East, and Singapore are increasingly participating in high-quality semiconductor IPO projects, reflecting growing confidence in the Chinese capital market [2][3]. Group 4: Industry Characteristics - The semiconductor industry is characterized by high R&D costs and long cycles, with the Hong Kong refinancing mechanism effectively meeting ongoing funding needs for companies [3]. - The demand for storage chips is surging due to increased AI inference needs, leading to heightened interest in upstream equipment and materials within the semiconductor supply chain [4]. Group 5: Globalization and Future Outlook - Going public in Hong Kong has become a crucial strategy for semiconductor companies to expand international business and enhance brand influence [5]. - The semiconductor sector is expected to benefit from the AI wave, with increasing recognition of Chinese tech stocks, particularly in the semiconductor space, anticipated to create multiple investment opportunities [5]. - The competitive structure within the semiconductor equipment sector is becoming clearer and more stable, with potential for above-expectation performance in the next two years [5].

Market Overview - The Hong Kong stock market showed mixed performance with the Hang Seng Index rising by 0.17%, the Hang Seng China Enterprises Index falling by 0.09%, and the Hang Seng Tech Index increasing by 0.28% [1][6] Individual Stocks - Pop Mart (09992) saw a significant increase of 5.97%, while other notable gainers included Wharf Real Estate (01997) up 4.81%, Li Auto-W (02015) up 4.13%, and Baidu Group-SW (09888) up 4.00% [1][6] - On the downside, China Life (02628) dropped by 3.82%, China Hongqiao (01378) fell by 3.01%, and JD Health (06618) decreased by 2.92% [1][6] Sector Performance - The commercial aerospace sector experienced a rebound, with JunDa Co. (02865) rising by 15.83%, Asia Pacific Satellite (01045) up 13.35%, Goldwind Technology (02208) increasing by 5.99%, and Aerospace Holdings (00031) up 3.17% [2][7] - The report from Changcheng Securities highlighted strong government support for the commercial aerospace industry, with the recent IPO progress of leading companies indicating potential sector growth [2][7] Semiconductor Sector - Semiconductor stocks showed strong performance, with TianShu ZhiXin (09903) surging by 22.51%, ASMPT (00522) up 6.29%, InnoCare (02577) rising by 5.14%, and Huahong Semiconductor (01347) increasing by 3.21% [3][8] - The Philadelphia Semiconductor Index rose by 3.18%, reaching a new historical high, driven by strong demand for AI servers and limited advanced process capacity [3][8] Company-Specific Developments - China Rare Earth Holdings (03788) reversed its decline, rising by 8.6% after announcing plans to issue 43.96 million subscription shares at a price of HKD 3.80, which is an 18.28% discount to the previous closing price [4][9] - The proceeds from the share issuance, estimated at approximately HKD 616 million, will be used to support the development of the Mt Bundy gold mine project, with full utilization expected by the end of 2027 [4][9] Pop Mart Developments - Pop Mart's stock increased by 5.97%, with the company recently repurchasing shares worth HKD 2.51 billion and HKD 96.49 million, reflecting confidence in its growth prospects [5][10] - Analysts noted that while the company faces challenges such as short IP cycles and supply chain issues, it is strategically expanding its offline presence to drive long-term growth in overseas markets [5][10][11]

Core Viewpoint - Goldman Sachs has raised its earnings forecast for Hua Hong Semiconductor (1347.HK) for 2027 to 2029 by 1%, driven by optimistic revenue outlook and signs of price increase momentum [1] Revenue Outlook - The revenue forecast for Hua Hong Semiconductor for 2027 to 2029 has been adjusted upwards by 1% to 2% [1] - Strong revenue growth is anticipated due to increased demand for specialized technology chips, such as power management ICs and image sensors, benefiting from the growth of AI servers and AI smart edge devices [1] Capacity Utilization and Profitability - With sustained high capacity utilization, Hua Hong is expected to have more room to optimize its order structure, leading to stronger revenue and profit performance [1] - The company is projected to directly benefit from the demand recovery trend, showcasing improved gross margins and optimized capacity utilization, indicating stronger earnings per share growth potential [1] Investment Rating and Target Price - Goldman Sachs has reiterated a "Buy" rating for Hua Hong Semiconductor and raised the target price from HKD 117 to HKD 134 [1]

Group 1 - Semiconductor stocks in Hong Kong experienced a significant rise, with InnoCare leading with over 7% increase and Hua Hong Semiconductor rising over 8%, reaching a historical high [1] - KeyBanc data indicates that Intel and AMD have nearly sold out their server CPU capacity for the entire year of 2026 due to large-scale cloud service providers purchasing aggressively [1] - Both Intel and AMD plan to increase server CPU prices by 10-15% to address extreme supply-demand imbalance and ensure stable future supply [1] Group 2 - Analysts predict that the market demand for server chips will grow at an annual rate of 30% to 40% by 2026 [1] - Guosen Securities' latest report highlights that the semiconductor sector is performing better than expected, with price increases across multiple segments and the upcoming release of AI glasses [1] - The report continues to recommend cyclical recovery semiconductor companies such as Naxin Micro and foundry firms like SMIC and Hua Hong Semiconductor [1]

Group 1 - Semiconductor stocks in Hong Kong experienced a significant rise at the beginning of trading, with InnoCare increasing by over 7% [1] - Hua Hong Semiconductor surged by over 8%, reaching a new historical high [1] - Newly listed stock Zhaoyi Innovation also hit a new high during the trading session [1] Group 2 - Both SMIC and Jingmen Semiconductor saw their stock prices increase by over 1% [1]

Group 1 - The core viewpoint of the article highlights a positive trend in Chinese technology stocks, driven by overnight gains in the US stock market, with significant increases in Hong Kong's technology ETFs [1] - The Hong Kong Technology 50 ETF (159750) and the Hong Kong Stock Connect Technology ETF (159125) saw increases of 0.95% and 0.65% respectively, with intraday highs of 1.52% and 1.29% [1] Group 2 - Goldman Sachs' Chief China Equity Strategist Liu Jinjun projects a target of 100 points for the MSCI China Index and 5200 points for the CSI 300 Index by the end of 2026 [2] - The expected return rate for the Chinese stock market in 2026 is estimated to be between 15% and 20%, primarily driven by earnings growth, with a projected earnings growth rate of 14% for Chinese stocks [2] Group 3 - Three main factors are identified to drive earnings growth in Chinese stocks: 1. The AI industry is expected to contribute significantly, with annual contributions of 2% to 3% to overall market earnings growth over the next 3 to 5 years as the focus shifts from computing power to application and commercialization [2] 2. The overseas strategy shows potential, as companies listed in the US S&P 500 have 28% of their revenue from overseas, compared to only 16% for Chinese companies, indicating substantial room for growth [2] 3. The "anti-involution" trend is also anticipated to positively impact earnings growth [3]

Group 1 - Semiconductor stocks in Hong Kong experienced a surge, with InnoCare leading with a rise of over 7%, and Hua Hong Semiconductor increasing by over 4%, reaching a historical high [1] - KeyBanc data indicates that due to significant purchases by large-scale cloud service providers, Intel and AMD's server CPU capacity for the entire year of 2026 is nearly sold out [1] - To address the extreme supply-demand imbalance and ensure stable future supply, both companies plan to increase server CPU prices by 10-15% [1] - Analysts predict that the market demand for server chips will grow at an annual rate of 30% to 40% by 2026 [1] Group 2 - Guosen Securities' latest report highlights that the semiconductor sector is experiencing better-than-expected conditions, with price increases across multiple segments and the imminent release of AI glasses [1] - The report continues to recommend cyclical recovery stocks such as Naxin Micro and foundry companies like SMIC and Hua Hong Semiconductor [1]