Investment Rating - The report rates SG Micro as a "Buy" with a target price of Rmb115, reflecting a positive outlook for the company amid ongoing market dynamics [32][45]. Core Insights - The report identifies China's mature semiconductors, particularly analog, as defensive investments due to the recent 34% retaliatory tariff on US imports, which is expected to enhance local supply and reduce competition from US firms [1][3][14]. - SG Micro is highlighted as the top beneficiary of the tariff, with expectations of improved earnings and market share gains as US competitors face cost disadvantages [5][21]. - The report anticipates that the tariff will accelerate the localization of semiconductor supply in China, benefiting companies like SG Micro, Will Semi, and Maxscend [3][14][21]. Summary by Sections Market Overview - The US tariffs have limited direct impact on Chinese semiconductors, as most are shipped to ODM/EMS outside the US and are not subject to tariffs. However, there is an indirect effect on demand due to increased selling prices [2][11]. Company Analysis - SG Micro is projected to expand its market share as the cost advantage of Texas Instruments is eliminated by the tariff. The company is expected to benefit from an ongoing recovery in the analog segment and tariff protection against US competitors [4][5][21]. - Will Semi is also rated as a "Buy," with expectations of strong growth driven by its CMOS Image Sensors (CIS) business, particularly in the automotive sector [48][49]. - Maxscend is rated as a "Sell" due to concerns over rising investment costs and potential profitability pressures despite its leadership in the RFFE market [39][40]. Financial Projections - SG Micro's revenue forecasts for 2024E and 2025E have been adjusted to Rmb3,301 million and Rmb4,188 million respectively, reflecting a year-on-year growth of 26% and 27% [22]. - The report indicates that SG Micro's gross profit margin is expected to stabilize around 51.3% in 2025, with net profit projected to reach Rmb828 million [22][32]. Valuation - The target price for SG Micro is based on a forward P/E of 65x for 2025E EPS, justified by the anticipated recovery in the analog semiconductor market and reduced foreign competition due to tariffs [45][46].

Investment Rating - The report maintains a HOLD rating for Maxscend, with a target price adjusted downward to RMB82.00 from RMB86.00, reflecting a potential upside of 2.3% from the current price of RMB80.15 [1][3]. Core Insights - Maxscend's FY24 revenue increased by 2.5% YoY to RMB4.5 billion, which was below CMBI estimates and Bloomberg consensus by 2% and 1% respectively. However, net profit saw a significant decline of 64.2% YoY to RMB402 million, missing estimates by 28% and 21% [1][2]. - The gross profit margin (GPM) and net profit margin (NPM) decreased by 7.0 percentage points and 16.7 percentage points respectively, attributed to margin pressure from the subsidiary Xinzhuo's ramp-up as the company shifts from a fabless model to a fab-lite strategy [1][2]. - Despite the near-term margin pressures, the long-term growth prospects for Maxscend remain positive as it develops platform-level manufacturing capabilities and strategic supply chain independence [1]. Financial Performance Summary - FY24 revenue was RMB4,487 million, with a YoY growth of 2.5%, while FY25 revenue is estimated to grow by 16.3% to RMB5,219 million [2][8]. - The gross margin for FY24 was reported at 39.5%, down from 46.4% in FY23, with expectations of a slight recovery to 40.2% in FY25 [2][8]. - Net profit for FY24 was RMB401.9 million, with a forecasted recovery to RMB587.3 million in FY25, reflecting a growth of 46.1% [2][8]. Market Position and Future Outlook - Module sales, which account for 42% of total revenue, grew by 18.6% YoY in FY24, while discrete sales declined by 7.6% YoY. The module business is expected to be a key growth driver, projected to grow by 25% YoY in FY25 [7][8]. - The report indicates that Maxscend will continue to face margin headwinds, particularly in the first half of FY25, but anticipates a gradual recovery in the second half due to seasonality and emerging demand from AI edge devices [7][8]. - The target price of RMB82.00 is based on a rolled-over 45x 2026E P/E, which is 10% higher than the average of peers at 40.7x, considering Maxscend's leading position in the RFFE market and its role in semiconductor localization [1][8].