Soochow Securities·2025-09-03 07:22Investment Rating - The report assigns a "Buy" rating for the company, marking the first coverage [3]. Core Views - The company is a leading player in China's wafer foundry industry and a core pillar of domestic chip manufacturing, with significant growth potential driven by increasing demand for advanced chips, particularly in AI applications [3][7]. - The company has achieved a competitive edge by being the first in China to mass-produce below 28nm process nodes and is expanding its capacity in advanced processes [3][7]. - The semiconductor industry is experiencing a recovery, with the company expected to benefit from the increasing demand for chips and the trend of domestic substitution [3][42]. Summary by Sections Financial Performance and Forecast - The company is projected to achieve revenues of CNY 67.196 billion, CNY 78.062 billion, and CNY 89.606 billion for 2025, 2026, and 2027 respectively, with a corresponding net profit of CNY 5.18 billion, CNY 6.158 billion, and CNY 7.207 billion [3][20]. - The company's revenue for 2023 is expected to be CNY 45.25 billion, reflecting a year-on-year decline of 8.61%, while the net profit is projected at CNY 4.823 billion, down 60.25% year-on-year [3][20]. - In 2024, the company anticipates a revenue increase to CNY 57.796 billion, a 27.72% growth, driven by strong demand and improved product mix [3][21]. Industry Overview - The global semiconductor industry is recovering, with a projected sales increase of 27% in 2025, reaching USD 58.98 billion, and a 21% increase in China's semiconductor sales [3][45]. - The wafer foundry market is characterized by high concentration, with the top five companies holding over 90% market share, indicating a strong oligopolistic structure [3][42]. - The company is positioned to capitalize on the growing demand for AI and high-performance computing, which are driving the need for advanced semiconductor solutions [3][49]. Competitive Positioning - The company has a significant market share, ranking third globally and first domestically, with a 6% share of the global market in 2024 [3][7]. - The company is focusing on expanding its production capacity, particularly in high-value 12-inch wafers, with a capital expenditure of approximately CNY 54.347 billion in 2024 [3][7]. - The company is enhancing its competitive edge through continuous investment in R&D, with a focus on mature process technologies and advanced nodes [3][34].