Investment Rating - The report assigns a "Buy" rating for the company with a target price of HKD 34.00, indicating a potential upside of 49.14% from the current price of HKD 22.8 [1][3]. Core Insights - The company's Q1 2024 revenue was USD 460 million, a year-on-year decline of 27.1%, but a slight increase of 1% quarter-on-quarter, slightly below Bloomberg consensus expectations of USD 470 million. The semiconductor industry is gradually recovering, with capacity utilization and wafer ASP still at low levels. The gross margin was 6.4%, down 25.7 percentage points year-on-year but up 2.4 percentage points quarter-on-quarter [1]. - The growth in the company's business this quarter was primarily driven by demand for CIS logic products and power management products, with revenues increasing by 63.8% and 15.9% year-on-year, reaching USD 60 million and USD 100 million, respectively. However, power devices and embedded business revenues declined by 38.4% and 50.2% year-on-year, reaching USD 140 million and USD 120 million, respectively [1]. - The company expects wafer ASP to benefit from a rebound in demand for CIS, BCD, and certain embedded and power devices, anticipating a price increase of 5-10% starting in H2 2024. The projected wafer ASP for 2024-2026 is expected to reach USD 405, USD 450, and USD 530, representing year-on-year changes of -23.8%, +11.1%, and +17.8%, respectively [1]. Financial Summary - The company's Q1 2024 net profit was USD 31.8 million, a year-on-year decline of 79.1% and a quarter-on-quarter decline of 10.2%, which was below Bloomberg consensus expectations of USD 38.38 million. The guidance for Q2 revenue is between USD 470 million and USD 500 million, with a midpoint indicating a 5.4% increase quarter-on-quarter [1]. - The overall capacity utilization for the quarter was 91.7%, down 11.4 percentage points year-on-year but up 7.6 percentage points quarter-on-quarter. The 8-inch wafer capacity utilization reached 100.3%, while the 12-inch capacity utilization was at 84.2% [1]. - The company’s capital expenditure in Q1 2024 increased by 39.7% year-on-year to USD 300 million, with USD 200 million allocated to Huahong Manufacturing [1].
华虹半导体：CIS及嵌入式产品需求驱动下半年产能利用率及ASP提升