HUA HONG SEMI-华虹公司：毛利率持续改善

Investment Rating - The report maintains a "Buy" rating for Huahong Semiconductor (688347) [2][7] Core Insights - The company reported a sales revenue of $526.3 million in Q3 2024, a year-on-year decrease of 7.4% but a quarter-on-quarter increase of 10.0%. The gross margin was 12.2%, down 3.9 percentage points year-on-year but up 1.7 percentage points quarter-on-quarter. The net profit attributable to shareholders was$ 44.8 million, a significant increase of 222.6% year-on-year and 571.6% quarter-on-quarter [4][5] - The overall semiconductor market is showing signs of recovery, particularly in power management ICs, with strong demand in both global and Chinese markets. The company’s 8-inch and 12-inch capacity utilization rates were 113.0% and 98.5%, respectively, leading to an overall capacity utilization rate of 105.3%, up 7.4 percentage points quarter-on-quarter [5] - For Q4 2024, the company expects sales revenue to be around $530-540 million and gross margin to be between 11% and 13%. The company plans to focus on embedded non-volatile memory and analog power management platforms while optimizing capacity structure [5][7] Financial Summary - The company’s projected revenues for 2024-2026 are 150 billion, 177 billion, and 210 billion yuan, respectively. The net profit attributable to shareholders is expected to be 9.0 billion, 20 billion, and 25 billion yuan for the same period. The current stock price corresponds to a PE ratio of 93, 42, and 33 times for 2024-2026, and a PB ratio of 1.91, 1.83, and 1.73 times [7][9] - The company’s Q3 2024 capital expenditure was$ 734 million, with $617.7 million allocated to Huahong Manufacturing. The total capital expenditure for 2025 is expected to be around$ 2-2.5 billion [5][7]