Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 24.00, indicating a potential upside of 32.7% from the current price of HKD 18.08 [1][2]. Core Insights - The company has shown a gradual recovery in market demand, with capacity utilization nearing full capacity. The second quarter revenue was USD 479 million, a year-on-year decline of 24.2% but a quarter-on-quarter increase of 4.0% [2]. - The gross margin for the second quarter improved to 10.5%, significantly higher than the previous quarter's 6.4% and above market expectations [2]. - The company is expected to benefit from the trend of self-sufficiency in China's semiconductor industry, with a forecasted revenue guidance for the third quarter of USD 510 million, reflecting a year-on-year decline of 10.3% but a quarter-on-quarter increase of 6.6% [2]. Financial Summary - The company's financial performance shows a projected revenue of USD 1.983 billion for FY24, a decrease of 13.3% year-on-year, with a gross margin of 11.4% [5][6]. - Net profit is expected to drop to USD 134.7 million in FY24, a decline of 51.9% year-on-year, but is projected to recover in FY25 with an increase to USD 244 million [5][6]. - The company’s cash flow analysis indicates a net operating cash flow of USD 692 million for FY25, reflecting a positive trend in cash generation [10]. Market Position - The company’s market share in the consumer electronics segment has shown signs of recovery, contributing 62% to total revenue in the latest quarter [2]. - The management anticipates maintaining high capacity utilization rates, with projections of 84% in Q4 2023 and 98% in Q1 and Q2 2024 [2]. - The company’s stock performance has been volatile, with a 52-week high of HKD 24.60 and a low of HKD 13.86, indicating significant market fluctuations [3]. Valuation Metrics - The report values the company at 0.8 times the projected 2024 price-to-book ratio, which is above the historical average forward P/E ratio by 10% [2]. - The expected earnings per share for FY24 is USD 0.08, with a projected P/E ratio of 29.5 [5][6]. Conclusion - The report concludes that despite challenges in average selling prices, the company is well-positioned to capitalize on the recovery in the semiconductor market and maintain a balanced approach between average selling prices and capacity utilization to maximize revenue [2].
华虹半导体：市场需求逐步回暖，产能利用率接近满载