Investment Rating - The report maintains a "Buy" rating for Huahong Semiconductor (1347 HK) with a target price of HK34.30 [2][9]. Core Insights - The new president, Dr. Bai Peng, has a solid background in IDM and foundry sectors, and he aims to enhance performance and efficiency by migrating some products to more advanced processes [7]. - The company is expected to benefit from the "China for China" strategy, competitive pricing compared to overseas peers, and the gradual ramp-up of its new 12-inch production line in Wuxi [7]. - The integration of Huahong's subsidiary, Huali Microelectronics, is anticipated to bring significant operational improvements and potential profit increases [7]. - Despite a slight increase in average selling prices (ASP), strong demand driven by consumer electronics is expected to continue into the first half of 2025 [8]. - Revenue forecasts for 2025 and 2026 have been adjusted downwards by 5% and 6% respectively due to pricing pressures, but the overall growth strategy remains intact [8][11]. Summary by Sections Financial Adjustments - The target price has been raised from HK44.00, reflecting a revised P/B multiple of 1.5x for 2025 [9][13]. - The 2025E EPS has been adjusted down from US0.09, a decrease of 22% [3][11]. - Revenue estimates for 2025E and 2026E have been reduced to US2,770 million, respectively, with year-on-year growth rates of 17% and 18% [11]. Valuation - The report emphasizes a P/B valuation approach, with the target P/B multiple increased to 1.5x, indicating a more optimistic outlook for Huahong's industry positioning and technology portfolio [13][14]. - The estimated book value per share for 2025 is projected at US44.00 [14]. Market Comparison - Huahong's current P/B ratio of 1.2x is at a discount compared to its peers, such as UMC at 1.7x and SMIC at 2.5x, highlighting its valuation attractiveness [9][14].
华虹半导体：对估值重塑胸有成竹；重申“买入”评级-20250305