Investment Rating - The report gives a "Recommend" rating for the company, considering its leading position in the domestic wafer foundry industry and the gradual recovery of downstream demand [1][4] Core Views - The company adheres to the "Specialty IC + Power Devices" strategy, focusing on the development of specialty process technologies, serving markets such as consumer electronics, communications, computers, industrial, and automotive [1] - With the gradual recovery of consumer electronics demand, the semiconductor industry cycle is expected to reach an inflection point, and the company's capacity utilization rate has improved significantly [1] - The company's gross margin is expected to continue to recover, driven by price increases and the full production of its Wuxi facility [1] - The domestic wafer foundry market is accelerating, with the localization of wafer manufacturing becoming a priority due to supply chain security concerns [1] - The company is a global leader in specialty process wafer foundry, with a comprehensive coverage of specialty process platforms and a focus on mature nodes [1] Company Overview - The company is a global leader in specialty process wafer foundry, offering a wide range of process platforms including embedded/non-volatile memory, power devices, analog and power management, and logic and RF [1][6] - The company has 3 8-inch and 1 12-inch wafer fabs, with another 12-inch fab under construction, and plans to invest $2 billion annually in equipment from 2024 to 2026 [1] - The company's revenue in H1 2024 was $939 million, a YoY decrease of 25.7%, with a net profit of $38 million, a YoY decrease of 83.3% [1] - The company's capacity utilization rate in Q2 2024 was 97.9%, a QoQ increase of 6.2 percentage points [1] Industry Trends - The global pure-play wafer foundry market has grown significantly, with the Chinese market expanding from RMB 39.1 billion in 2018 to RMB 77.1 billion in 2022, with a CAGR of 8.5% [1] - The proportion of mature process capacity in China is expected to increase from 29% in 2022 to 33% in 2027, driven by policy support and subsidies [1][28] - The power device market is booming, with global market size expected to grow from $17.5 billion in 2020 to $26.2 billion in 2026, with a CAGR of 6.96% [30] - The MCU market in China is growing faster than the global market, with a CAGR of 8.29% from 2015 to 2020, compared to the global CAGR of 5.34% [37] Financial Projections - The company's revenue is expected to be $2.254 billion, $2.556 billion, and $3.098 billion in 2024, 2025, and 2026, respectively, with net profits of $102 million, $195 million, and $302 million [1][2] - The corresponding PE ratios are 52x, 27x, and 17x, and PB ratios are 0.8x, 0.8x, and 0.8x for 2024, 2025, and 2026, respectively [1][2] Strategic Focus - The company is focusing on mature nodes, with its 8-inch fabs covering nodes from 0.35µm to 90nm, and its 12-inch fabs covering nodes from 90nm to 55nm [1][50] - The company is expanding its 12-inch capacity, with the Wuxi fab expected to reach full production capacity of 94,500 wafers per month by the end of 2023 [19] - The company is also building a new 12-inch fab, which is expected to start production by the end of 2024, with a planned capacity of 83,000 wafers per month [19] Competitive Advantages - The company has a comprehensive coverage of specialty process platforms, including embedded/non-volatile memory, power devices, analog and power management, and logic and RF [1][6] - The company has a strong R&D capability, with 1,285 R&D personnel, accounting for 18.72% of the total workforce, and has accumulated 8,969 patents [23] - The company has a stable customer base, with 92.3% of its revenue coming from system companies and fabless design companies in 2023 [8]

业绩温和复苏，产能利用率持续提升 买入（维持） 核心观点 ⚫ 二季度收入温和环比回升，销量显著增长，毛利率略超预期。2024 年二季度主营业 务收入 4.79 亿美元，同比下降 24.2%，环比增长 4.0%，符合业绩指引（4.7-5.0 亿 美元）；归母净利润为 667.3 万美元，同比下降 91.5%，环比下降 79.0%。收入环 比增幅的实现主要源于晶圆出货量增加，本期付运晶圆（折合 8 英寸）110.6 万片， 同比增长 3.0%，环比增速 7.8%；但销售单价相比上季度继续下滑。24Q2 毛利率达 到 10.5%，略高于指引上限（6%-10%），相比 24Q1 的 6.4%环比提升 4.1pct，主 要源于 8 英寸和 12 英寸晶圆的产能利用率上升，报告期 8 英寸、12 英寸产能的稼 动率分别达到 107.6%、89.3%。公司指引三季度销售收入在 5.0-5.2 亿美元，毛利 率在 10%-12%之间，直接驱动因素预计来自销量和单价的增长。 ⚫ 电源管理、CIS 和逻辑 IC 产品需求增长。收入按技术平台分，模拟与电源管理收入 同比提升 25.7%，主要系电源管理产品需求增加；逻辑及射频收入同 ...

HUA HONG SEMICONDUCTOR LIMITED 華虹半導體有限公司 (Incorporated in Hong Kong with limited liability) (Stock Code: 01347) （股份代號：01347） （於香港註冊成立之有限公司） 2024 中期報告 INTERIM REPORT DEFINITIONS In this interim report, unless the context otherwise requires, the following terms shall have the meanings set out below. | "Board" | the board of Directors of the Company; | | --- | --- | | "China" or "the PRC" | the People's Republic of China, but for the purpose of this interim report and | | | for geographical reference only, exc ...

Investment Rating - Buy (Maintained) [1] Core Views - The company's Q2 2024 gross margin exceeded expectations, reaching 11%, which was above the upper guidance of 10% [3] - The semiconductor cycle is showing signs of moderate recovery, driven by a rebound in consumer electronics demand [1][4] - The company's capacity utilization rate reached 98% in Q2 2024, with expectations to remain high through 2025 [5] - The company's second 12-inch production line is progressing smoothly, with trial production expected by the end of 2024 and full capacity by Q1 2025 [5] Financial Performance - Q2 2024 revenue was $480 million, down 24% YoY but up 4% QoQ [3] - Net income attributable to shareholders was $70 million, down 92% YoY and 79% QoQ, primarily due to a shift from tax credits in Q1 2024 to tax expenses in Q2 2024 [3] - Revenue from consumer electronics, industrial & automotive, communications, and computers in Q2 2024 was $290 million, $110 million, $60 million, and $10 million respectively, with consumer electronics showing a 4% QoQ increase [4] - Embedded memory and discrete device revenues in Q2 2024 were $140 million and $150 million respectively, up 15% and 6% QoQ [4] Capacity and ASP - The company's 8-inch equivalent ASP in Q2 2024 was $432.7, down 26% YoY and 4% QoQ, but expected to rise in H2 2024 due to price increases in logic, RF, CIS, and embedded memory [5] - The company expects Q3 2024 revenue to be between $500 million and $520 million, with 70% of the growth driven by ASP increases and 30% by additional shipments [5] Financial Forecasts - Revenue for 2024E, 2025E, and 2026E is projected to be $1,982 million, $2,493 million, and $3,044 million respectively [2] - Net income attributable to shareholders for 2024E, 2025E, and 2026E is forecasted to be $83.95 million, $104.93 million, and $165.84 million respectively [2] - The company's P/B ratio for 2024E, 2025E, and 2026E is estimated to be 0.58, 0.57, and 0.56 respectively [2] Market Data - The closing price on September 2, 2024, was HKD 16.70, with a P/B ratio of 4.57 [6] - The company's market capitalization was HKD 21,875.37 million [6] Financial Ratios - ROE for 2024E, 2025E, and 2026E is projected to be 1.32%, 1.63%, and 2.53% respectively [10] - Gross margin for 2024E, 2025E, and 2026E is expected to be 10.75%, 18.54%, and 19.88% respectively [10]

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性 或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部份內容而產生或因倚 賴該等內容而引致的任何損失承擔任何責任。 HUA HONG SEMICONDUCTOR LIMITED 華虹半導體有限公司 （於香港註冊成立之有限公司） （股份代號：01347） 截至二零二四年六月三十日止六個月 中期業績公告 華虹半導體有限公司（「本公司」）董事會（「董事會」）謹此公佈本公司及其子公司 截至二零二四年六月三十日止六個月的未經審核綜合業績。 本公告載列本公司二零二四年中期報告全文，並符合香港聯合交易所有限公司 （「香港聯交所」）證券上市規則有關中期業績初步公告附載資料之相關規定。 本公司二零二四年中期報告的印刷版本將於適當時候寄發予本公司股東，並可於 香港聯交所網站 www.hkexnews.hk 及本公司網站 www.huahonggrace.com 進行查 閱。 承董事會命 華虹半導體有限公司 董事長兼執行董事 張素心先生 中國上海，二零二四年八月二十九日 於本公告日期，本公司董事分別為： 執行董事： 張素心 （董事長） 唐 ...

12 Aug 2024 CMB International Global Markets | Equity Research | Company Update Hua Hong Semi (1347 HK) Slowly but surely, gradual recovery is in play Hua Hong Semi announced 2Q24 results. Revenue was down 24.2% YoY but up 4.0% QoQ to US$479mn, slightly missing Bloomberg consensus by 2.0% and our estimates by 1.6%. The moderate sequential growth was a result of growing wafer shipments (+8.4% QoQ) partially offset by continued downward ASP (-3.5% QoQ). GPM increased QoQ to 10.5% (vs. 6.4%/27.7% in 1Q24/2Q23) ...

Investment Rating - Buy rating with a target price of HKD 29.00, representing a 57.8% upside potential from the current price [2][5] Core Views - The company's 24Q2 revenue reached USD 480 million, a 4% QoQ increase but a 24% YoY decline, with a gross margin of 10.5% [2] - Net profit attributable to shareholders was USD 6.67 million, down 92% YoY and 79% QoQ, with a capacity utilization rate of 98%, up 6 ppts QoQ [2] - The company expects 24Q3 revenue to grow 4-9% QoQ, with gross margin improving to 10-12% [2] - Recovery in the consumer electronics and AI sectors drove 24H1 revenue growth, while the power device market remains weak [2] - The company's 12-inch fab is expected to start mass production in 25Q1, with 40,000 wafers per month capacity by mid-2025 [2] - Wafer ASP is expected to gradually recover, with 2024-2026 ASPs projected at USD 422/522/566, and gross margins at 11.6%/21.1%/27.7% [2] Financial Performance Summary - 24Q2 eNVM revenue was USD 140 million, up 15% QoQ but down 34.2% YoY, driven by lower MCU ASPs and reduced demand for smart card chips [2] - Discrete device revenue was USD 150 million, up 6.3% QoQ but down 39.4% YoY, due to lower demand and ASPs for IGBT and super-junction products [2] - Logic and RF revenue was USD 60 million, up 11% YoY, benefiting from growth in CIS and logic product demand [2] - Analog and power management revenue was USD 100 million, down 0.4% QoQ but up 25.7% YoY, driven by increased demand for power-related products [2] Future Outlook - The company is expected to maintain high capacity utilization, with wafer ASPs gradually recovering, supported by strong demand for CIS, RF, and PMIC products [2] - The automotive and industrial markets remain uncertain, putting pressure on power device and MCU product prices [2] - The company's second 12-inch fab is expected to contribute to ASP improvements starting in 2025, with significant capacity expansion planned [2] Financial Projections - 2024-2026 revenue is projected at USD 1.97/2.94/3.45 billion, with net profits of USD -47/196/519 million [2][4] - 2024-2026 gross margins are forecasted at 11.6%/21.1%/27.7%, with EBITDA margins at 24.4%/42.2%/47.4% [4][6] - The company's P/B ratio for 2024 is estimated at 1x, supporting the target price of HKD 29.00 [2]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 24.00, indicating a potential upside of 32.7% from the current price of HKD 18.08 [1][2]. Core Insights - The company has shown a gradual recovery in market demand, with capacity utilization nearing full capacity. The second quarter revenue was USD 479 million, a year-on-year decline of 24.2% but a quarter-on-quarter increase of 4.0% [2]. - The gross margin for the second quarter improved to 10.5%, significantly higher than the previous quarter's 6.4% and above market expectations [2]. - The company is expected to benefit from the trend of self-sufficiency in China's semiconductor industry, with a forecasted revenue guidance for the third quarter of USD 510 million, reflecting a year-on-year decline of 10.3% but a quarter-on-quarter increase of 6.6% [2]. Financial Summary - The company's financial performance shows a projected revenue of USD 1.983 billion for FY24, a decrease of 13.3% year-on-year, with a gross margin of 11.4% [5][6]. - Net profit is expected to drop to USD 134.7 million in FY24, a decline of 51.9% year-on-year, but is projected to recover in FY25 with an increase to USD 244 million [5][6]. - The company’s cash flow analysis indicates a net operating cash flow of USD 692 million for FY25, reflecting a positive trend in cash generation [10]. Market Position - The company’s market share in the consumer electronics segment has shown signs of recovery, contributing 62% to total revenue in the latest quarter [2]. - The management anticipates maintaining high capacity utilization rates, with projections of 84% in Q4 2023 and 98% in Q1 and Q2 2024 [2]. - The company’s stock performance has been volatile, with a 52-week high of HKD 24.60 and a low of HKD 13.86, indicating significant market fluctuations [3]. Valuation Metrics - The report values the company at 0.8 times the projected 2024 price-to-book ratio, which is above the historical average forward P/E ratio by 10% [2]. - The expected earnings per share for FY24 is USD 0.08, with a projected P/E ratio of 29.5 [5][6]. Conclusion - The report concludes that despite challenges in average selling prices, the company is well-positioned to capitalize on the recovery in the semiconductor market and maintain a balanced approach between average selling prices and capacity utilization to maximize revenue [2].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 24.00, indicating a potential upside of 32.7% from the current price of HKD 18.08 [1][2]. Core Insights - The company has shown signs of recovery in market demand, with capacity utilization rates nearing full capacity. The second quarter revenue was USD 479 million, a year-on-year decline of 24.2% but a quarter-on-quarter increase of 4.0% [2]. - The gross margin for the second quarter improved to 10.5%, up from 6.4% in the previous quarter, despite a year-on-year decline from 27.7% [2]. - The company is expected to benefit from the trend of self-sufficiency in China's semiconductor industry, with a forecasted revenue of USD 510 million for the third quarter, reflecting a year-on-year decline of 10.3% but a quarter-on-quarter increase of 6.6% [2]. Financial Data Summary - For FY24E, the company is projected to have sales revenue of USD 1,983 million, a year-on-year decline of 13.3%. The gross margin is expected to be 11.4%, with a net profit of USD 135 million, reflecting a 51.9% year-on-year decline [5][6]. - The company’s capacity utilization rates are projected to remain high, with expectations of 84% in Q4 2023 and 92% and 98% in Q1 and Q2 2024, respectively [2]. - The company’s financial outlook includes a slight downward adjustment of revenue forecasts by 3% and 4% for FY24 and FY25, respectively, while gross margin forecasts have been increased by 0.5 percentage points [2].

Investment Rating - Maintains a "Buy" rating for Hua Hong Semiconductor (1347 HK) and Hua Hong Company (688347 CH) [2] - The target price for Hua Hong HK is HKD 23.3, with a potential upside of 21%, and for Hua Hong A-shares, it is RMB 43.7, with a potential upside of 27% [2][3] Core Views - Hua Hong Semiconductor's 2Q24 performance met market expectations, with a significant improvement in gross margin and capacity utilization [2] - The company's gross margin in 2Q24 reached 10.5%, exceeding the guidance range, and is expected to continue improving in 3Q24 [2] - The second 12-inch fab in Wuxi is expected to start trial production in 4Q24 and officially operate in 1Q25, contributing to long-term revenue growth [2] - The company anticipates price increases across most product lines in 3Q24 and 4Q24, except for IGBT, which remains weak [2] - The EV/EBITDA target valuation for 2024 has been raised to 11x, reflecting improved fundamentals [2] Financial Performance and Guidance - 2Q24 revenue declined by 24% YoY but showed a sequential improvement, with a 7% QoQ growth expected in 3Q24 [2] - 2Q24 net profit was $6.67 million, down both YoY and QoQ due to increased expenses from new fabs [2] - 3Q24 revenue guidance is $510 million, with a gross margin of 11%, indicating further improvement [2][8] - The company aims to achieve gross margins of 45%-50% for 8-inch fabs and 25%-30% for 12-inch fabs within 12-16 months [2] Valuation and Financial Metrics - Hua Hong HK's current price-to-book ratio is 0.7x, below the historical average of 1.0x, indicating attractive valuation [2][11] - The EV/EBITDA ratio for Hua Hong HK is 4.1x, significantly below the historical average of 15.0x [11] - The company's free cash flow is expected to improve, with a forecast of -$416 million in 2024E and -$313 million in 2025E [6] Industry and Competitive Position - Hua Hong Semiconductor benefits from the semiconductor industry's upward momentum, with improving product mix and pricing power [2] - The company's capacity utilization has significantly improved, supporting gross margin expansion [2] - The Wuxi 12-inch fab's capacity is expected to reach 20,000 wafers per month by the end of 2025, driving long-term growth [2] Financial Projections - Revenue for 2024E is projected at $1,996 million, with a gross margin of 11.5% [9] - EBITDA for 2024E is forecasted at $492 million, with an EBITDA margin of 24.6% [9] - Net profit for 2024E is expected to be $65 million, with a net profit margin of 3.3% [9]