SMIC(688981) 浦银国际证券·2025-02-14 07:40Investment Rating - The report maintains a "Buy" rating for the company, with an upgraded target price of HKD 55.6 for the Hong Kong stock and RMB 120.1 for the A-share, indicating potential upside of 15.8% and 15.2% respectively [2][4]. Core Insights - The company is experiencing a continuous improvement in gross margin, with Q4 2024 revenue reaching USD 2.207 billion, a 32% year-on-year increase, and a gross margin of 22.6%, exceeding market expectations [3][11]. - The company anticipates a strong order demand for the first half of 2025, driven by domestic subsidies for consumer electronics and geopolitical factors leading to preemptive orders [2][3]. - The long-term outlook remains optimistic due to domestic demand for localization and the company's competitive advantages in the semiconductor industry [2][4]. Financial Performance Summary - Q4 2024 revenue was USD 2.207 billion, with a gross profit of USD 499 million, resulting in a gross margin of 22.6%, which is a 6.2 percentage point increase year-on-year [11]. - The company expects Q1 2025 revenue to be around USD 2.362 billion, reflecting a 35% year-on-year growth [12]. - The projected revenue for 2025 is USD 9.764 billion, with a gross margin forecasted to improve to 19.7% [5][13]. Earnings Forecast Summary - The company’s net profit for 2024 is projected to be USD 493 million, with a significant increase to USD 829 million in 2025, representing a 68% growth [5][13]. - Basic earnings per share are expected to rise from USD 0.06 in 2024 to USD 0.10 in 2025 [5][13]. - The EBITDA for 2025 is forecasted at USD 5.246 billion, with an EV/EBITDA multiple of 15.9x [4][14]. Market Position and Valuation - The company is positioned favorably within the semiconductor industry, with a projected EV/EBITDA of 15.9x for 2025, indicating potential for valuation upside [4][14]. - The report highlights the competitive landscape, noting that while there is pressure from new capacity in the semiconductor foundry sector, the company maintains a strong market position [2][4].