Core Viewpoint - China International Capital Corporation (CICC) reports that Huahong Semiconductor's Q3 performance is stable, with revenue meeting expectations, but gross margin shows strong improvement, rising by 2.6 percentage points to 13.5% due to higher wafer shipment volume, average selling price (ASP), and capacity utilization exceeding expectations [1] Group 1: Q3 Performance - Huahong Semiconductor's revenue aligns with expectations, while gross margin improves significantly [1] - Gross margin increase driven by higher wafer shipment volume, ASP, and capacity utilization [1] - Despite strong gross margin, net profit did not meet targets due to high depreciation costs [1] Group 2: Q4 Outlook - Q4 outlook presents mixed signals, with management guiding revenue for Q4 2025 to be between $650 million and $660 million [1] - Gross margin is expected to remain stable, 2 percentage points above market consensus, driven by price increases and demand growth in most sub-segments of discrete components [1] - Discrete components remain a drag on overall performance [1] Group 3: Future Projections - CICC maintains revenue estimates for Huahong Semiconductor but raises gross margin forecasts by 50 to 79 basis points due to strong ASP increases expected in H2 2025 when capacity is fully loaded [1] - The company is expected to benefit from strong domestic substitution momentum and AI-related demand [1] - CICC maintains a "Buy" rating, raising the target price from HKD 51.1 to HKD 94.5 based on a projected price-to-book ratio of 3.2 times [1]
大行评级丨中银国际：华虹半导体第三季毛利率表现强劲 上调目标价至94.5港元