Company Overview - SMIC (981) is rated as "Buy" with a target price of HKD 50.00, indicating a potential upside of 16.27% from the current price of HKD 43.00[5][9]. - The company has a market capitalization of HKD 339.79 billion and has issued 7.99 billion shares[5]. Financial Performance - In Q1 2025, SMIC reported revenue of USD 2.25 billion, a year-on-year increase of 28.4%, but below the consensus estimate of USD 2.36 billion[6]. - The gross margin for Q1 2025 was 22.5%, remaining stable compared to the previous quarter[6]. - Net profit attributable to shareholders increased by 161.9% year-on-year to USD 190 million, with earnings per share of USD 0.02[6]. Production and Capacity - The company's production capacity increased by 26,000 wafers to 974,000 equivalent 8-inch wafers, with a utilization rate of 89.6%, up 4.1 percentage points from the previous quarter[6]. - The ASP (Average Selling Price) of wafers reached USD 933, reflecting a year-on-year increase of 2.9% but a quarter-on-quarter decline of 9.0%[6][8]. Market Demand and Guidance - Demand from consumer electronics and automotive sectors remains strong, contributing 40.6% and 9.6% to revenue, respectively[7]. - For Q2 2025, the company expects revenue to decline by 4%-6% to USD 2.12-2.16 billion, with a gross margin forecasted between 18%-20%[6]. Growth Projections - The company anticipates a revenue CAGR of 23.7% and a net profit CAGR of 75.4% over the next three years[9]. - The urgency for domestic semiconductor substitution and government subsidies for consumer electronics are expected to drive capacity utilization recovery in the coming quarters[9]. Risks - Potential risks include underperformance in capacity expansion, semiconductor cycle downturns, and slower-than-expected recovery in downstream demand[10].