Core Viewpoint - Guohai Securities maintains a "Buy" rating on Huahong Semiconductor (01347), citing the company's growth in wafer volume and price under the trend of self-control and "China for China" [1] Group 1: Financial Performance - In Q3 2025, Huahong Semiconductor reported revenue of $635 million, a quarter-over-quarter increase of 12.2% and a year-over-year increase of 20.7% [2] - The company achieved a gross margin of 13.5%, up 2.6 percentage points quarter-over-quarter and 1.3 percentage points year-over-year, exceeding guidance of 10%-12% [2] - Net profit attributable to shareholders was $26 million, reflecting a significant quarter-over-quarter increase of 223.5% but a year-over-year decrease of 42.6% [2] Group 2: Future Guidance - For Q4 2025, Huahong Semiconductor expects revenue between $650 million and $660 million, representing a quarter-over-quarter increase of 3.1% and a year-over-year increase of 21.5% [3] - The company anticipates a gross margin of 12%-14% for Q4, which is above market expectations [3] - Revenue growth is expected to be driven by collaborations with "China-for-China" strategic customers and the gradual release of Fab9A capacity [3] Group 3: Investment Forecast - Huahong Semiconductor's revenue projections for 2025, 2026, and 2027 are $2.4 billion, $3.03 billion, and $3.35 billion, respectively, with net profits of $90 million, $194 million, and $263 million [4] - The diluted EPS for the same years is projected to be $0.05, $0.11, and $0.17, respectively [4] - The price-to-book ratio for November 10, 2025, is expected to be 2.74x, 2.66x, and 2.31x for the respective years [4]

Investment Rating - The report maintains a "Buy" rating for Huahong Semiconductor (1347.HK) [1][8] Core Insights - The company has seen a positive impact from price increases and product structure optimization, leading to improved gross margins [5] - In Q3 2025, Huahong Semiconductor reported revenues of $635 million, a quarter-over-quarter increase of 12.2% and a year-over-year increase of 20.7% [6] - The gross margin for Q3 2025 was 13.5%, exceeding market expectations, driven by capacity utilization and ASP (Average Selling Price) improvements [5][6] Financial Performance Summary - Q3 2025 revenue: $635 million (QoQ +12.2%, YoY +20.7%) [6] - Q3 2025 net profit: $26 million (QoQ +223.5%, YoY -42.6%) [6] - Q3 2025 wafer shipments: 1.4 million equivalent 8-inch wafers (QoQ +7.3%, YoY +16.7%) [6] - Capacity utilization rate: 109.5% (QoQ +1.2 percentage points, YoY +4.2 percentage points) [6] Future Guidance - For Q4 2025, the company expects revenue between $650 million and $660 million, with a gross margin forecast of 12% to 14% [5] - The anticipated revenue growth is supported by collaborations with strategic customers and the gradual release of capacity from Fab 9A [5] - The company plans to continue its price increase strategy and invest in high-margin technology platforms to enhance product structure [5] Earnings Forecast - Projected revenues for 2025, 2026, and 2027 are $2.4 billion, $3.0 billion, and $3.3 billion respectively [6] - Expected net profits for the same years are $90 million, $194 million, and $263 million respectively [6] - The diluted EPS for 2025, 2026, and 2027 are projected to be $0.05, $0.11, and $0.17 respectively [6]

Core Viewpoint - Huahong Semiconductor's Q2 2025 financial results exceeded expectations, driven by higher capacity utilization and wafer ASPs, indicating a positive trend in the semiconductor industry [1][2]. Financial Performance - Q2 2025 revenue reached $566.1 million, a year-over-year increase of 18.3% and a quarter-over-quarter increase of 4.6%, aligning with the guidance of $550 to $570 million [1]. - Gross margin was 10.9%, up 0.4 percentage points year-over-year and 1.7 percentage points quarter-over-quarter, surpassing the previous guidance of 7% to 9% [1]. - Net profit was -$33 million, with attributable net profit of $8 million, reflecting a year-over-year increase of 19.2% and a quarter-over-quarter increase of 112.1% [1]. Capacity and Production Trends - The company's capacity utilization rate reached 108.3%, a significant increase of 5.6 percentage points quarter-over-quarter [1]. - Total capacity at the end of Q2 2025 was 447,000 wafers per month (equivalent to 8-inch wafers), indicating accelerated expansion of fab9 [1]. - Wafer shipments totaled 1.305 million wafers (equivalent to 8-inch wafers), with a quarter-over-quarter increase of 6.0% [1]. Revenue Growth by Product Line - All major process platforms, except for standalone non-volatile memory, showed quarter-over-quarter revenue growth in Q2 2025 [1]. - The analog and power management platform experienced the fastest growth, with quarterly revenue increasing by 18% to $161.2 million, accounting for 28.5% of total revenue, reflecting strong demand for AI-related power management chips [1]. Future Guidance - Management provided Q3 2025 revenue guidance of $620 to $640 million and gross margin guidance of 10% to 12%, both better than previous expectations [2]. - The "China for China" strategy and rising wafer prices are expected to contribute positively to future performance [2]. Earnings Forecast and Valuation - Revenue forecast for 2025 has been raised by 6% to $2.404 billion, reflecting a year-over-year growth of 20.0% [2]. - The 2026 revenue forecast has been increased by 12.1% to $2.798 billion, corresponding to a year-over-year growth of 16.4% [2]. - The target price has been raised by 39% to HKD 50, indicating a 12% upside potential based on a P/B valuation method [2].