SMIC(00981) 交银国际·2025-02-13 08:23Investment Rating - The investment rating for the company is downgraded to Neutral [1][6][38] Core Views - The stock price may have fully reflected the upside potential, leading to the downgrade in rating. Despite a positive outlook on the domestic substitution trend in wafer foundry and the company's leading position in the industry, investors should consider high capital expenditures, downstream demand uncertainties, and increased competition in mature processes [6][7][9] - The target price is raised to HKD 48, reflecting a 2.25x price-to-book ratio for 2025, accounting for improved market liquidity and a reassessment of technology stocks [6][9][12] Financial Overview - Revenue projections for the company are as follows: - 2023: USD 6,322 million - 2024: USD 8,030 million - 2025E: USD 9,414 million (up from previous estimate of USD 9,094 million) - 2026E: USD 10,291 million - 2027E: USD 11,238 million [5][20][40] - Net profit estimates are: - 2023: USD 903 million - 2024: USD 493 million - 2025E: USD 1,055 million - 2026E: USD 1,348 million - 2027E: USD 1,778 million [5][20][40] - The company’s gross margin is projected to improve to 20.9% in 2025, up from 20.1% previously estimated [20][40] Market Performance - The stock has increased approximately 200% since the second half of 2024, driven by improved fundamentals and increased market liquidity [6][7][9] - The company’s market capitalization is approximately HKD 287,213 million, with a 52-week high of HKD 47.95 and a low of HKD 14.02 [3][6] Capital Expenditure - The company has guided for capital expenditures of USD 7.33 billion in 2024, with expectations to maintain similar levels in 2025, which is higher than previous market expectations [6][7][9] - The capital expenditure as a percentage of revenue is projected to remain high, indicating a focus on expansion despite potential impacts on gross margins [6][7][9] Valuation Metrics - The company’s price-to-book ratio is currently at 2.2x, which is significantly above the historical average of 1.0x, indicating a high valuation relative to its peers [6][9][12] - The relative premium of the A-shares over H-shares is currently at 142%, which is at the historical lower bound compared to an average of 199% [6][9][19]