HUA HONG SEMI-华虹公司：收入增长改善显著-20250218

Investment Rating - The report maintains a "Buy" rating for Huahong Semiconductor [3][4] Core Views - Huahong Semiconductor's revenue growth has significantly improved, with a projected 18% year-on-year growth in Q4 2024 and a 17% growth forecast for Q1 2025 [3][4] - The company is expected to benefit from new capacity and a recovery in demand from downstream customers, particularly in the industrial and automotive sectors [3][4] - Despite increased depreciation from new capacity impacting gross margins, the current EV/EBITDA and P/B ratios are attractive at 6.9x and 0.6x respectively [3][4] Financial Performance Summary - Q4 2024 revenue was $539 million, a 2% increase quarter-on-quarter and an 18% increase year-on-year [4][12] - The gross margin for Q4 2024 was 11.4%, with a forecasted gross margin of 10% for Q1 2025, slightly down from 12.2% in Q3 2024 [4][12] - The company expects to expand its capacity to 30,000-40,000 wafers per month by the end of the year, leading to an additional depreciation of approximately$ 170-180 million [4][12] Earnings Forecast Adjustments - The 2025 revenue forecast has been adjusted to $2.356 billion, reflecting an 18% year-on-year growth [6][14] - The projected net profit for 2025 is$ 140 million, a significant recovery from a loss in 2024 [6][14] - The basic earnings per share for 2025 is estimated at $0.08, with a gross margin forecast of 11.1% [6][14] Valuation Summary - The target price for Huahong Semiconductor is set at HKD 30.0, representing a potential upside of 17% [3][7] - For the A-share market, the target price is set at RMB 55.0, indicating a potential upside of 18% [3][8] - The report highlights that the current market valuation is below historical averages, suggesting potential for price appreciation [21][20]