EBSCN·2024-08-12 14:06Investment Rating - The report maintains a "Buy" rating for both A-shares and H-shares of the company [3]. Core Views - The company reported strong performance in Q2 2024, with revenue reaching $1.901 billion, a year-on-year increase of 21.8% and a quarter-on-quarter growth of 8.6%, exceeding previous guidance [2]. - The guidance for Q3 2024 is robust, with expected revenue growth of 13%-15%, translating to $2.15-$2.19 billion, significantly above market expectations [2]. - The recovery in downstream demand, particularly in consumer electronics and smartphones, is driving growth in wafer foundry demand [2]. Summary by Sections Financial Performance - In Q2 2024, the company achieved a gross margin of 13.9%, surpassing the previous guidance of 9%-11% [2]. - The net profit attributable to shareholders was $165 million, a year-on-year decline of 59% but a quarter-on-quarter increase of 129% [2]. - The company expects full-year revenue growth to exceed the industry average, with the second half of the year projected to outperform the first half [2]. Market Demand and Product Mix - The revenue breakdown for Q2 2024 shows that consumer electronics and smartphones are the main growth drivers, contributing 32% and 36% of total revenue, respectively [2]. - The company reported an increase in the utilization rate of 8-inch and 12-inch wafers, with 12-inch wafer shipments expected to rise [2]. Capacity and ASP Trends - The capacity utilization rate in Q2 2024 was 85%, up 4 percentage points from the previous quarter, driven by the recovery in 8-inch wafer utilization [2]. - ASP (Average Selling Price) is expected to increase due to rising demand and a favorable product mix, with price increases anticipated to continue at least through Q4 2024 [2]. Profit Forecast and Valuation - The net profit forecasts for 2024 and 2025 have been adjusted to $679 million and $911 million, respectively, reflecting a decrease of 25% and 13% from previous estimates [2]. - The stock is valued at a price-to-book ratio of 0.8x for both 2024 and 2025 for H-shares, and 2.5x and 2.4x for A-shares, benefiting from domestic substitution opportunities [2].