HUA HONG SEMI(688347) 华创证券·2024-11-16 18:23Investment Rating - The report maintains a "Strong Buy" rating for the company, indicating an expectation to outperform the benchmark index by over 20% in the next six months [1][2]. Core Insights - The company's Q3 2024 performance exceeded expectations, with sales revenue reaching 530 million and $540 million, with a projected gross margin of 11% to 13% [1][2]. - The overall capacity utilization rate has improved significantly, reaching 105.3%, with a year-on-year increase of 18.5% and a quarter-on-quarter increase of 7.4% [2]. - The company is focusing on innovative specialty processes and technologies, maintaining its leading position in domestic specialty processes. The 40nm specialty process platform began small-scale trial production in H1 2024, and the 65/90nm BCD platform has seen significant growth in shipment volumes [2]. - The company is committed to its "8-inch + 12-inch" development strategy, with a monthly capacity of 95,000 12-inch wafers as of Q3 2024. A new wafer fab in Wuxi is expected to begin trial operations in Q4 2024, with full capacity release anticipated in 2025 [2]. - The company is projected to benefit from domestic substitution opportunities, with high profitability in its 8-inch capacity and rapid expansion in its 12-inch capacity expected to drive revenue growth [2]. Financial Summary - For 2023, total revenue is projected at 16,232 million yuan, with a year-on-year decline of 3.3%. The net profit attributable to the parent company is expected to be 1,936 million yuan, reflecting a year-on-year decrease of 35.6% [1][3]. - The earnings per share (EPS) for 2024 is forecasted at 0.50 yuan, with a significant decline of 55.3% compared to the previous year. EPS is expected to recover to 1.22 yuan in 2025 and 1.41 yuan in 2026 [1][3]. - The company’s price-to-earnings (P/E) ratio is projected to be 96 in 2024, decreasing to 39 in 2025 and 34 in 2026 [1][3].