Zhi Tong Cai Jing·2025-08-11 07:04Core Viewpoint - Goldman Sachs has lowered its earnings per share forecast for SMIC (00981) for the years 2023 to 2027 by 1%, reflecting adjustments in gross margin and operating profit margin assumptions due to increased depreciation and amortization from capacity expansion [1] Group 1: Earnings Forecast and Valuation - The investment rating for SMIC's H-shares remains "Buy," with a target price of HKD 63.7, based on a target price-to-earnings ratio of 36 times for 2028 [1] - The company is expected to see a temporary slowdown in revenue growth in Q2, with guidance indicating a quarter-on-quarter revenue increase of 5% to 7% [1] Group 2: Margin and Capacity Insights - The gross margin guidance for the current quarter is set at 18% to 20%, which is below Goldman Sachs' and market expectations of 20.6% and 21.1% respectively, primarily due to increased depreciation and amortization [1] - Positive factors include stable capacity utilization, strong customer orders, and ongoing capacity expansion that supports the company in capturing demand and providing more complete products [1] Group 3: Future Outlook - Management anticipates stable orders in the coming quarters, driving delivery growth, with average prices on an upward trend due to reduced discounts on 12-inch wafers and higher contributions from 12-inch wafer sales compared to 8-inch wafers [1] - Despite low visibility in terminal demand for Q4, management expects capacity utilization to remain stable, supported by strong customer demand [1]