华虹_2025 年第三季度收入预计环比增长 10% - 13%，毛利率指引超预期；2025 年第二季度毛利率、营业利润超预期；评级中性-Hua Hong (1347.HK)_ 3Q25 revenues to grow at +10 ~ +13% QoQ with GM guidance beat; 2Q25 GM_ OP beat; Neutral

Summary of Hua Hong's Earnings Call Company Overview - Company: Hua Hong (1347.HK) - Industry: Semiconductor foundry focusing on specialty technologies Key Financial Highlights - 3Q25 Revenue Guidance: Expected to grow by +10% to +13% QoQ, with gross margin (GM) guidance of 10% to 12% [1][2] - 2Q25 Results: Revenue of US$566 million, representing an 18% YoY increase and a 5% QoQ increase. Gross margin was 10.9%, exceeding company guidance of 7% to 9% [1][10] - Operating Loss: Reported at US$36 million, which was better than expected, but net profit was lower than consensus at US$8 million [1][10] Demand and Pricing Outlook - Demand Expectations: Management anticipates solid demand from 1H25 to continue into the second half of the year [2] - Pricing Adjustments: The company is working on upward pricing adjustments, expected to reflect in 3Q and 4Q financials, with increases projected to be in the single-digit range [2][4] Capacity Expansion Plans - Second 12'' Fab: The ramp-up of the second 12'' fab is on track, increasing total capacity to 447k wpm by 2Q25, compared to 391k wpm in 4Q24. Management aims to bring 80%-90% of planned capacity online by 2H26 [3][4] - Future Expansion: A new fab is planned after the second 12'' fab to support continuous growth [3] Gross Margin and Operating Income - 3Q25 GM Guidance: Expected to improve to 10% to 12%, supported by better utilization rates and cost efficiencies [4][8] - 4Q GM Visibility: Management expressed low visibility for 4Q GM due to the introduction of new capacities [8] Earnings Revisions - 2025E Earnings Revision: Net income estimates revised down by 23% due to potential dilution from non-controlling interests. Revenue estimates slightly reduced by 2%, while gross profit estimates increased by 3% [10][11] Valuation and Price Target - Target Price: Raised by 14.7% to HK$46.9, based on a target P/E of 35.3x for 2026E [11][21] - Investment Rating: Maintained at Neutral due to moderate upside potential [11][21] Risks and Considerations - Key Risks: Include stronger or weaker-than-expected end-market demand, ramp-up speed of the 12" fab, and uncertainties surrounding US-China trade relations [22][24] Conclusion - Investment Thesis: Hua Hong is positioned for long-term growth through capacity expansions and product optimization, despite facing near-term margin pressures from ASP competition and increasing depreciation and amortization burdens [24]