HUA HONG SEMI-华虹半导体：1Q25 revenue in-line; GPM under pressure-20250512

Investment Rating - Maintain BUY with a target price revised up to HK $37.50, reflecting a 15.6% upside from the current price of HK$ 32.45 [3][6] Core Insights - Hua Hong Semi reported 1Q25 revenue of US $541 million, up 17.6% YoY, driven by a 42% increase in wafer shipments, although ASP pressure continues [1] - The gross profit margin (GPM) for 1Q25 was 9.2%, showing improvement from 6.4% in 1Q24, but below consensus estimates by 1.3 percentage points [1] - Management guided 2Q revenue to be between US$ 550 million and US $570 million, indicating a 17% YoY growth and a 3% QoQ increase [1] - The company is expected to benefit from increased domestic demand for chip fabrication amid ongoing geopolitical tensions, which may accelerate semiconductor localization in China [6] Financial Performance Summary - FY25 revenue is projected to grow by 15.6% YoY to US$ 2,317 million, with a GPM of 10.6% [2][6] - Net profit for FY25 is estimated at US $24 million, a significant decline from US$ 58 million in FY24 [2][6] - The company’s GPM is expected to recover slowly due to ASP pressures and increased depreciation costs from new fab ramp-ups [6] Share Performance and Market Data - The market capitalization of Hua Hong Semi is HK $42,477.1 million, with an average turnover of HK$ 1,748.7 million over the last three months [3] - The stock has shown a 1-month performance of 10.0% and a 6-month performance of 41.7% [5] Shareholding Structure - Major shareholders include Shanghai Hua Hong with 26.4% and XINXIN HK Capital with 13.0% [4]