Huaxin Securities·2025-08-12 11:15Investment Rating - The report assigns a "Buy" rating for the company, marking the first coverage of the stock [14]. Core Insights - The company is positioned as a leading wafer foundry in mainland China, benefiting from advanced process optimization and the trend of domestic substitution [5][12]. - In H1 2025, the company achieved revenue of $4.456 billion, a year-on-year increase of 22.04%, and a net profit of $321 million, up 35.61% year-on-year, with a gross margin of 21.45%, reflecting improvements in product structure and capacity utilization [5]. - The report highlights the high barriers in the AI chip industry, with domestic manufacturers gradually overcoming challenges related to design and manufacturing [6][9]. - The domestic semiconductor equipment sector is advancing, with significant support from national policies, which is expected to alleviate the challenges faced by local manufacturers [7][12]. - The demand for advanced process chips is rapidly increasing, particularly in AI computing, smart automotive driving chips, and high-end consumer electronics [9][12]. - The company is expected to benefit from the growing demand in various sectors, including AI computing and smart automotive technologies, due to its advanced process capabilities and production capacity [12][14]. Financial Projections - The company is projected to achieve revenues of $9.386 billion, $11.159 billion, and $12.852 billion for the years 2025, 2026, and 2027, respectively, with corresponding EPS of HKD 0.73, HKD 0.94, and HKD 1.19 [14][16]. - The report anticipates a revenue growth rate of 16.9% in 2025, followed by 18.9% in 2026 and 15.2% in 2027 [16][17]. - The net profit is expected to rebound significantly, with a projected growth rate of 51.5% in 2025 and continued growth in subsequent years [16][17].