Core Viewpoint - Zhongyin International believes Huahong Semiconductor (01347) will continue to benefit from strong domestic substitution momentum and AI-related demand, maintaining a "Buy" rating and raising the target price from HKD 51.1 to HKD 94.5 [1] Financial Performance - Huahong's Q3 performance was solid, with revenue meeting expectations and a strong gross margin increase of 2.6 percentage points to 13.5%, driven by higher wafer shipment volumes, average selling prices (ASP), and capacity utilization rates exceeding expectations [1] - Despite the strong gross margin, net profit did not meet targets due to high depreciation costs [1] Q4 Outlook - The outlook for Q4 is mixed, with management guiding for Q4 2025 revenue between USD 650 million and USD 660 million, and gross margin expected to remain stable, which is 2 percentage points higher than market consensus, driven by price increases and demand growth in most sub-segments of discrete components [1] - However, discrete components remain a drag on performance [1] Future Estimates - Zhongyin International maintains its revenue estimates for Huahong Semiconductor but raises gross margin forecasts by 50 to 79 basis points, considering strong ASP increases in the second half of 2025 when capacity is fully loaded [1] - Potential short-term profit margin limitations are noted due to price wars in discrete power components, rising engineering costs, and increased depreciation expenses [1] - The company has adjusted its earnings per share estimates for 2026 and 2027 upwards by 5% and 4%, respectively [1]
中银国际：上调华虹半导体目标价至94.5港元 AI相关需求持续