First Capital Securities·2025-02-13 02:17Investment Rating - The investment rating for the company is "Strong Buy," indicating an expected stock price increase of over 20% within the next six months compared to the market benchmark index [22]. Core Insights - The report highlights that the demand for domestic chips is expected to accelerate, with growth potential in both mature and advanced process chips in China, leading to an optimistic long-term outlook for the domestic chip and overall electronics industry [3]. - The company announced a sales revenue forecast of $2,207.3 million for Q4 2024, representing a 31% year-on-year increase, and expects a sequential revenue growth of 6% to 8% for Q1 2025, outperforming seasonal trends and market expectations [5][6]. - The gross margin for Q4 2024 is reported at 22.6%, with a 2.1 percentage point increase from Q3 and a 6.2 percentage point increase year-on-year. The company anticipates a gross margin range of 19% to 21% for Q1 2025, also exceeding market expectations [9][5]. - The net profit from non-controlling interests reached $163 million in Q4 2024, a 160% year-on-year increase, indicating significant improvements in advanced process revenue and profitability [17][5]. - The company shipped over 8 million 8-inch equivalent wafers in 2024, with Q4 shipments of 1.992 million wafers, reflecting an 18.9% year-on-year growth, although the growth rate is lower than revenue growth, suggesting that revenue increases are primarily driven by higher average product prices [5]. - Capital expenditures for Q4 2024 were $1.66 billion, with an annual total of approximately $7.33 billion. The company expects capital expenditures in 2025 to remain roughly the same as in 2024, focusing on advanced process expansion [5]. - The report notes that domestic AI models, such as Deepseek, are being adopted by nearly all computing chip companies in China, indicating a strong growth trajectory for domestic chip applications [5].