CAITONG SECURITIES·2025-09-22 11:14Investment Rating - The report assigns an "Accumulate" rating for the company [2][56]. Core Views - The company is a leading global foundry in integrated circuit manufacturing, ranking fifth in global market share and is a leader in China's semiconductor industry [8]. - The semiconductor market in China is expected to grow significantly, with a projected market size of $185.11 billion in 2024, reflecting a year-on-year increase of 20% [33]. - The company has a comprehensive process platform that meets diverse customer needs, benefiting from the localization of chip manufacturing [41]. - Revenue and profit forecasts indicate a steady growth trajectory, with expected revenues of $9.26 billion, $10.82 billion, and $12.63 billion for 2025, 2026, and 2027 respectively [51][52]. Summary by Sections Company Overview - The company was founded in 2000 and has established itself as a major player in the foundry market, providing 8-inch and 12-inch wafer foundry services [12]. - It has a strong management team with extensive industry experience and no single controlling shareholder [21][24]. Market Dynamics - The Chinese semiconductor market is experiencing robust growth, driven by local production demands and geopolitical factors that favor domestic foundries [34]. - The foundry industry has high entry barriers due to significant capital requirements, leading to a concentrated market structure [38]. Financial Performance - The company has shown steady revenue growth, with a compound annual growth rate (CAGR) of 15.53% from 2018 to 2024 [26]. - The first half of 2025 saw a revenue increase of 22.04% year-on-year, indicating a return to profitability [26]. Revenue and Profit Forecast - The company is expected to achieve revenues of $9.26 billion in 2025, with a net profit of $679 million, reflecting a profit margin improvement [51][54]. - The projected gross margins for 2025, 2026, and 2027 are 21.17%, 23.31%, and 26.14% respectively, indicating a positive trend in profitability [52]. Competitive Position - The company maintains a diverse customer base across various sectors, including telecommunications and consumer electronics, which supports its revenue expansion [43]. - The company is actively expanding its production capacity, with a current monthly capacity of 991,300 equivalent 8-inch wafers [46].