HUA HONG SEMI(688347) 中邮证券·2024-08-11 12:00Investment Rating - Buy rating maintained for the company [1] Core Views - The company is a global leader in specialty process wafer foundry, with a comprehensive portfolio of technology platforms including embedded/standalone non-volatile memory, power devices, analog and power management, and logic and RF [3] - The company has optimized its 8-inch product structure and is strengthening its advanced "specialty IC + power device" strategy with a new 12-inch production line [3] - The company's 12-inch production line in Wuxi has fully released its 9.45k wafers/month capacity, and the new 12-inch production line with 8.3k wafers/month capacity is expected to start production in 2025 [3] - The company's revenue from 8-inch wafers has grown due to product mix optimization, while 12-inch wafer revenue has rapidly increased due to capacity ramp-up and process stabilization [11] Financial Performance - The company's revenue is expected to reach 17.5/19.1/21.1 billion yuan in 2024/2025/2026, with net profit attributable to the parent company of 0.7/2.0/2.5 billion yuan [5] - The company's EBITDA is expected to be 5.18/7.82/11.91/13.60 billion yuan in 2024/2025/2026, with a PE ratio of 83/28/23 and a PB ratio of 1.32/1.27/1.19 [6] - The company's 8-inch wafer revenue is expected to continue to grow with product mix optimization, while the new 12-inch production line will open up further growth space [8] Technology and Market Position - The company is the largest smart card IC foundry globally and the largest MCU foundry in China, with leading power device foundry capabilities [3] - The company's power device portfolio is industry-leading, with advanced deep-trench super-junction MOSFET and IGBT technologies [3] - The company's 12-inch production line in Wuxi is the world's first 12-inch power device foundry line, covering IC process nodes from 90nm to 65/55nm [3] - The company's 8-inch wafer revenue grew due to product mix optimization, while 12-inch wafer revenue increased rapidly due to capacity ramp-up and process stabilization [11] Industry Outlook - China's mature process wafer foundry capacity share is expected to increase from 29% in 2022 to 33% in 2027 [4] - The global foundry market is expected to grow to 26.1 billion for IDM foundries by 2025 [4] - China's wafer foundry market share is expected to increase from 24% in 2022 to 28% in 2027, with mature process capacity share rising to 33% [4] Customer and Supplier Base - The company has a diverse and global customer base, with over one-third of the top 50 global chip design companies as clients [58] - The company's top five suppliers accounted for 32.17% of total procurement in 2023, with no single supplier exceeding 50% of total procurement [60]