Great Wall Securities·2025-08-11 14:25Investment Rating - The report maintains a "Buy" rating for the company [6][7] Core Views - The company is expected to benefit from continuous channel inventory replenishment, with Q3 revenue guidance indicating a 5% to 7% quarter-on-quarter increase, with a midpoint of approximately $2.342 billion [4][35] - The company is positioned as a leading domestic wafer manufacturer, with advanced mature process technology, and is anticipated to see revenue growth driven by increased localization demand [6][41] Financial Summary - Revenue Forecasts: - 2023A: ¥45,250 million - 2024A: ¥57,796 million - 2025E: ¥65,991 million - 2026E: ¥76,048 million - 2027E: ¥86,672 million - Year-on-Year Growth Rates: - 2023A: -8.6% - 2024A: 27.7% - 2025E: 14.2% - 2026E: 15.2% - 2027E: 14.0% [1] - Net Profit Forecasts: - 2023A: ¥4,823 million - 2024A: ¥3,699 million - 2025E: ¥5,235 million - 2026E: ¥6,026 million - 2027E: ¥7,033 million - Year-on-Year Growth Rates: - 2023A: -60.3% - 2024A: -23.3% - 2025E: 41.5% - 2026E: 15.1% - 2027E: 16.7% [1] Q2 Performance Highlights - Q2 revenue was $2.209 billion, a quarter-on-quarter decrease of 1.7%, which was better than the initial guidance of a 4% to 6% decline, primarily due to channel inventory replenishment driven by policy impacts [2][12] - Gross margin for Q2 was 20.4%, which was better than the guidance of 18% to 20%, despite a quarter-on-quarter decline of 2.1 percentage points [2][13] - The company saw a 4.3% increase in wafer shipments in Q2, with an average selling price (ASP) declining by 6.3% due to an increase in the proportion of 8-inch wafer revenue [16][20] Q3 Guidance - The company expects Q3 revenue to increase by 5% to 7% quarter-on-quarter, with a midpoint of $2.342 billion, driven by continued channel inventory replenishment [4][35] - The gross margin guidance for Q3 is set at 18% to 20%, with a midpoint of 19%, reflecting a quarter-on-quarter decline of 1.4 percentage points [36] Market Demand and Segmentation - The automotive sector's revenue contribution is targeted to increase from approximately 5%-6% to 10% in the first phase, driven by rising demand for automotive chips [5][37] - The company is experiencing significant demand growth in network-related products, storage controllers, and mobile devices, benefiting from increased localization and higher silicon content in low-end mobile phones [5][37] Capital Expenditure - The company plans to maintain its capital expenditure for 2025 at a level comparable to 2024, with an expected annual increase of 50,000 pieces per month in capacity [38][40]