Investment Rating - The investment rating for Hua Hong Semiconductor is maintained as "Buy" with a target price of HKD 29.40 [3][6]. Core Insights - Hua Hong Semiconductor reported Q3 revenue of USD 526 million, a 10.0% increase quarter-on-quarter, and a gross margin of 12.2%, exceeding previous guidance [3][13]. - The company expects Q4 revenue to grow by 1.7% quarter-on-quarter, with a gross margin forecasted to remain stable between 11% and 13% [3][5]. - ASP (Average Selling Price) has stabilized after six consecutive quarters of decline, with Q3 ASP increasing by 1.2% to USD 415 [4][17]. Revenue and Profitability - Q3 revenue was USD 526 million, a decrease of 7.4% year-on-year but an increase of 10.0% quarter-on-quarter, surpassing the company's prior guidance [13][17]. - The gross margin for Q3 was 12.2%, which is a 1.7 percentage point increase from the previous quarter, driven by improved capacity utilization [3][17]. - The company anticipates Q4 revenue to be in the range of USD 530-540 million, with a gross margin of 11%-13% [18]. Capacity Utilization and ASP - The capacity utilization for 8-inch and 12-inch wafers improved to 113.0% and 98.5%, respectively, in Q3 [4][17]. - The ASP for Q3 was USD 415, reflecting a recovery after a prolonged decline [4][17]. Future Outlook - For Q4, Hua Hong expects overall market growth to slow, with specific pressure on the automotive and industrial sectors [5][18]. - The company is set to commence operations at its Wuxi Phase II facility in December, which is expected to gradually ramp up production capacity [5][19]. - The forecast for 2024 includes a slight revenue increase driven by modest price increases, with expectations for ASP to recover gradually [18][19]. Financial Projections - Revenue projections for 2024, 2025, and 2026 have been adjusted to USD 1.996 billion, USD 2.030 billion, and USD 2.296 billion, respectively [6][15]. - Net profit forecasts for the same years are adjusted to USD 0.893 billion, USD 0.713 billion, and USD 0.520 billion, respectively [6][15].
华虹半导体：Q3营收超预期，ASP企稳