SPDB International·2024-08-12 11:35Investment Rating - The report maintains a "Buy" rating for the company, with an upgraded target price of HKD 19.3 for the Hong Kong stock and RMB 56.7 for the A-share, indicating potential upside of 22% and 26% respectively [7][8]. Core Insights - The company is experiencing an upward trend in the semiconductor fundamentals, with a projected 14% quarter-over-quarter revenue growth for Q3 and a gross margin target of 19%, up 5.1 percentage points from the previous quarter. This growth is driven by local demand, optimization of product mix, and favorable pricing [7][8]. - The second quarter performance exceeded market expectations, with a 9% quarter-over-quarter and 22% year-over-year revenue increase. The company anticipates a 34% year-over-year revenue growth for Q3 [7][11]. - The company’s 12-inch capacity is in high demand, with an expected increase of approximately 60,000 wafers per month by year-end, surpassing previous plans [7][8]. Financial Performance Summary - Q2 2024 revenue reached USD 1.901 billion, a 22% increase year-over-year and a 9% increase quarter-over-quarter. Gross profit was USD 265 million, with a gross margin of 13.9% [11]. - The company reported a net profit of USD 165 million in Q2, a 59% decline year-over-year but a 129% increase quarter-over-quarter [11]. - For 2024, the company’s revenue is projected to be USD 7.875 billion, with a year-over-year growth rate of 34% [9][13]. Valuation Metrics - The current price-to-book ratio for the Hong Kong stock is 0.8x, and for the A-share, it is 2.7x, both indicating potential for upward movement compared to historical averages [7][18]. - The report adjusts the EBITDA forecasts for 2024 and 2025, reflecting a more optimistic outlook based on recent performance and guidance [8][13]. Market Expectations - The market expects the company to maintain a strong performance in the second half of the year, with overall sales anticipated to exceed the first half, leading to a revenue growth rate higher than the industry average [7][8].