2025-11-18 09:41Summary of SMIC Conference Call Company Overview - Company: Semiconductor Manufacturing International Corporation (SMIC) - Ticker: 0981.HK - Industry: Semiconductor Foundry Key Points Demand and Market Outlook - Near-term Demand: No material change expected in near-term demand, with full loadings anticipated in a seasonally slower 4Q25E due to supply chain localization and domestic customer share gains [1][2] - Memory Prices: Memory prices are a critical factor influencing the end-demand outlook for 2026E, with management expressing concerns about memory shortages impacting handset and consumer electronics production [1][2] - Customer Planning: Customers are cautious in their 2026 business planning due to uncertainties regarding adequate memory supply [1][2] Financial Performance and Projections - Revenue Forecasts: Revenue projections for FY25F, FY26F, and FY27F are largely unchanged, with slight adjustments made to gross margin (GM) and operating profit margin (OPM) reflecting efficiency gains [1][3] - Earnings Per Share (EPS): Revised EPS for 2026F and 2027F increased by 20% and 29% respectively, reflecting the anticipated 100% net profit consolidation of SMNC starting from 2Q26F [1][3] - Target Price (TP): The target price has been raised to HKD75.0, based on a price-to-book (P/B) ratio of 3.5x for 2026F [1][4] Financial Metrics - Revenue Growth: Projected revenue growth rates are 15.2% for FY25F, 18.1% for FY26F, and 12.0% for FY27F [3][9] - Profitability Ratios: - Gross margin expected to improve to 21.1% in FY25F and 21.7% in FY26F [3][16] - Operating margin projected at 10.9% for FY25F and 9.4% for FY26F [3][16] - Net Profit: Expected net profit for FY25F is USD590 million, increasing to USD734 million in FY26F [3][9] Capital Expenditure and Capacity - Capex Plans: SMIC plans to maintain a capex budget of USD7.5 billion for 2025E, similar to 2024 levels, with capacity additions expected to be uneven quarter to quarter [2][3] - Supply and Competition: SMIC will add more supply into 2026E, driven by domestic semiconductor localization demand, but will not engage in aggressive pricing unless necessary [2][3] Risks and Challenges - Upside Risks: Include better-than-expected end-demand, slower-than-expected technology migration by competitors, successful mergers and acquisitions, and increased policy support from the Chinese government [12][24] - Downside Risks: Include weak end-demand and intensifying geopolitical issues [24] Additional Insights - Market Capitalization: As of November 14, 2025, SMIC's market cap is approximately USD56.76 billion [4][8] - Stock Performance: The stock has shown significant growth over the past year, with a 12-month absolute return of 176.8% [8] This summary encapsulates the key insights from the SMIC conference call, highlighting the company's outlook, financial performance, and market dynamics.