Summary of Huahong Semiconductor Conference Call Company Overview - **Company**: Huahong Semiconductor - **Industry**: Semiconductor Manufacturing Key Points and Arguments 1. **Capacity Expansion**: Huahong Semiconductor's total capacity reached 413,000 wafers (equivalent to 8-inch) in Q1 2025, with the new Wuxi plant contributing an additional 25,000 wafers not fully accounted for yet. Significant delivery increases are expected in Q2 due to new capacity release [2][5][6]. 2. **Average Selling Price (ASP) Trends**: In Q1 2025, the ASP for 8-inch wafers slightly decreased while the ASP for 12-inch wafers slightly increased, leading to an overall ASP decline of approximately 0.x%. ASP is expected to rise in Q2 to Q4, despite initial operational pressures from the new plant [2][7][8]. 3. **Growth in Application Areas**: Rapid growth is observed in power management, RF, high-voltage power semiconductors, and embedded flash memory. Power device capacity is fully utilized, with potential price increases anticipated. Demand in the industrial robotics sector is recovering, and high-voltage power device demand remains strong [2][9]. 4. **Sales Performance by Product Type**: In Q1, sales revenue for analog and power management products grew by 34.8% year-over-year, while logic and RF products saw slower growth at 4%. The CIS business impacted overall growth, although WiFi RF showed good growth [2][10]. 5. **Cost and Margin Outlook**: The new plant's initial high fixed costs are pressuring gross margins, but as capacity increases, these pressures are expected to ease. The goal is to gradually increase overall gross margin from 10% to 20% [2][12][14]. 6. **Technological Advancements**: The company plans to advance to 28nm and 22nm processes, primarily for high-performance computing, IoT devices, and automotive electronics, with production taking place at the new Wuxi plant [2][12]. 7. **Utilization Rates**: The first 12-inch wafer fab has maintained full capacity, with actual production exceeding 100,000 wafers since early 2025. The second fab is expected to reach 83,000 wafers by mid-2026 [4][6]. 8. **Market Demand and Inventory Risks**: The company maintains a positive outlook for market demand in the second half of the year, despite some potential inventory risks in domestic applications. Overall, demand remains strong [15]. 9. **AI Impact**: The development of AI is significantly boosting power management business growth in North America, with expectations for continued acceleration in performance in the coming quarters [3][17][18]. 10. **Strategic Partnerships**: A strategic cooperation agreement with STMicroelectronics focuses on 40nm products, with expected sales growth starting in late 2025 and into 2026 [25]. Additional Important Insights - **MCU Market Performance**: The MCU market is gradually improving, with expectations for better performance in Q2 compared to Q1. Smart card sales showed significant growth in Q1 [11][15]. - **Revenue Distribution**: Future revenue distribution across product categories is expected to change, with power management anticipated to grow the fastest, while logic and RF may see adjustments to optimize high-value capacity utilization [22]. - **Stock Price Reaction**: The recent stock price decline may be attributed to market misunderstanding of the company's guidance, despite sales growth. This presents an opportunity for interested investors [27][28].

Investment Rating - The report maintains a "Buy" rating for Huahong Semiconductor (1347.HK) [6] Core Views - The company achieved revenue of $541 million in Q1 2025, a year-on-year increase of 17.6% and a quarter-on-quarter increase of 0.3%, aligning with the company's guidance of $530 to $550 million [1] - The overall demand is expected to gradually recover, with structural growth in demand for products such as analog and power management due to US-China tariff policies [2] - The company is accelerating capacity expansion, with monthly production capacity expected to reach 40,000 wafers by the end of 2025 [3] - The forecast for net profit has been revised downwards for 2025-2027 due to increased depreciation pressure from accelerated capacity expansion, with expected net profits of $80 million, $180 million, and $270 million respectively [4] Summary by Sections Financial Performance - Q1 2025 revenue was $541 million, with 8-inch wafer revenue at $230 million (down 4% YoY) and 12-inch wafer revenue at $310 million (up 41% YoY) [1] - Q1 2025 gross margin was 9.2%, slightly above the lower end of the guidance range of 9%-11%, with a year-on-year increase of 2.8 percentage points [1] Demand and Market Outlook - The company expects a gradual recovery in downstream demand, with electronic consumer goods revenue accounting for 64.3% of total revenue, growing 20.9% YoY [2] - The ASP for 12-inch wafers shows signs of price increases, while the 8-inch wafer ASP is stabilizing but lacks upward momentum [2] Capacity Expansion - Huahong Semiconductor is actively advancing the construction of new manufacturing facilities, with a projected monthly capacity of 40,000 wafers by the end of 2025 [3] - Capital expenditures in Q1 2025 amounted to $510.9 million, with significant investments in 12-inch wafer production [3] Profit Forecast and Valuation - The net profit forecast for 2025-2027 has been adjusted downwards, reflecting increased depreciation pressure from capacity expansion [4] - The current stock price corresponds to a P/E ratio of 94x for 2025 and 41x for 2026, indicating a favorable long-term growth outlook supported by capacity expansion [4]

Investment Rating - The report maintains a "Buy" rating for the company, with a target price raised to HKD 37.5, reflecting a potential upside of 15.6% from the current price of HKD 32.45 [1][3][7]. Core Insights - The company reported a 1Q25 revenue of USD 541 million, a year-on-year increase of 17.6%, driven by a 42% increase in wafer shipments, despite ongoing price pressures [1]. - The gross margin for 1Q25 was 9.2%, which is below market expectations and the guidance range, but improved from 6.4% in the same quarter last year [1]. - Management expects 2Q25 revenue to be in the range of USD 550-570 million, indicating a 17% year-on-year growth [1]. - The semiconductor industry is expected to benefit from accelerated domestic substitution processes amid increasing geopolitical risks [1][7]. Financial Summary - For FY25E, the company is projected to achieve revenue of USD 2.317 billion, reflecting a 15.6% year-on-year growth, with gross margins expected to recover to 10.6% [2][8]. - The net profit for FY25E is estimated at USD 24 million, a significant decrease from the previous year, but expected to rebound in FY26E to USD 253 million [2][8]. - The company’s capacity utilization rates remain high at 100% for 8-inch and 105% for 12-inch factories, with new capacity expected to contribute from 1Q25 [7][8]. Market Position - Approximately 82% of the company's revenue comes from China, with 9.4% from North America, positioning it well to benefit from domestic demand for semiconductor manufacturing [7]. - The report highlights that the company is likely to maintain high utilization rates post new capacity deployment, driven by increasing domestic chip manufacturing needs [7].

Investment Rating - Maintain BUY with a target price revised up to HK$37.50, reflecting a 15.6% upside from the current price of HK$32.45 [3][6] Core Insights - Hua Hong Semi reported 1Q25 revenue of US$541 million, up 17.6% YoY, driven by a 42% increase in wafer shipments, although ASP pressure continues [1] - The gross profit margin (GPM) for 1Q25 was 9.2%, showing improvement from 6.4% in 1Q24, but below consensus estimates by 1.3 percentage points [1] - Management guided 2Q revenue to be between US$550 million and US$570 million, indicating a 17% YoY growth and a 3% QoQ increase [1] - The company is expected to benefit from increased domestic demand for chip fabrication amid ongoing geopolitical tensions, which may accelerate semiconductor localization in China [6] Financial Performance Summary - FY25 revenue is projected to grow by 15.6% YoY to US$2,317 million, with a GPM of 10.6% [2][6] - Net profit for FY25 is estimated at US$24 million, a significant decline from US$58 million in FY24 [2][6] - The company’s GPM is expected to recover slowly due to ASP pressures and increased depreciation costs from new fab ramp-ups [6] Share Performance and Market Data - The market capitalization of Hua Hong Semi is HK$42,477.1 million, with an average turnover of HK$1,748.7 million over the last three months [3] - The stock has shown a 1-month performance of 10.0% and a 6-month performance of 41.7% [5] Shareholding Structure - Major shareholders include Shanghai Hua Hong with 26.4% and XINXIN HK Capital with 13.0% [4]

金十数据5月12日讯，建银国际发报告指，考虑到华虹半导体(01347.HK)新厂折旧增加，对其毛利率展 望较为保守，下调集团2025—2027年盈测，同时小幅下调平均每股账面价值预测。另一方面，在工业和 汽车市场触底回升的带动下，功率器件和MCU（公司在中国拥有领先技术）的需求可能在下半年出现 显著复苏。因此，该行将华虹半导体估值目标倍数上调，上调集团H股目标价20%，由30港元升至36港 元。因该行相信，随著本地化趋势以及工业和汽车市场的好转，华虹半导体将迎来复苏，故维持"跑赢 大市"评级。 建银国际：产能提升压力拖累华虹半导体毛利率 上调目标价20% ...

Investment Rating - The report downgrades the investment rating for Hua Hong Semiconductor Ltd from Overweight to Equal-weight [1][6][27] Core Insights - The rising depreciation burden and intense pricing competition in the 8-inch wafer market are expected to lead to gross margin erosion in 2025 and 2026, indicating that the stock appears fairly valued [1][6][38] - The company guided for 2Q25 revenue of US$550-570 million, with a gross margin forecast of 7-9%, reflecting a decline due to increased depreciation costs and the ramp-up of the new 12-inch fab [3][13] - The pricing environment for 8-inch wafers remains soft, which is likely to hinder gross margin recovery for Hua Hong [4][38] Summary by Sections Financial Performance - 1Q25 revenue was US$541 million, showing a 0.3% increase quarter-over-quarter but an 18% decrease year-over-year, with a gross margin of 9.2%, down 2.2 percentage points from the previous quarter [2][11] - The company reported a net income of US$4 million in 1Q25, a significant decline compared to the previous year [11] Guidance and Projections - For 2Q25, the company expects revenue to be between US$550-570 million, with a gross margin of 7-9%, indicating a continued decline in profitability [3][13] - The report revises the 2025 EPS estimate down by 14% but raises the 2026 and 2027 EPS forecasts by 5% and 6%, respectively, due to anticipated capacity and shipment growth trends [23][24] Market Dynamics - The report highlights that the 12-inch wafer demand remains strong, which may gradually drive up prices, while the 8-inch wafer market faces pricing pressure due to increased competition [4][38] - The acquisition of HLMC is noted, with plans for integration by 2026, focusing on overlapping mature-node business [5][38] Valuation - The price target for Hua Hong is raised to HK$34.00 from HK$32.00, reflecting changes in the EPS estimates for 2025-2027 [25][27] - The stock is currently trading at 1.2 times the estimated book value per share for 2025, which is considered fair compared to historical averages [27][39]

Core Viewpoint - The semiconductor industry is experiencing a significant shift, with AI chip demand surging and companies like TSMC profiting from advanced processes, while Hua Hong Semiconductor faces challenges in its mature process strategy, leading to a stark contrast in revenue growth and profit decline [1][2][5]. Financial Performance - Hua Hong Semiconductor reported a revenue increase of 18.66% year-on-year in Q1 2025, reaching 3.913 billion yuan, primarily due to increased wafer shipments [2][4]. - However, the net profit for the same period plummeted by 89.73% to 22.76 million yuan, attributed to rising R&D costs, reduced tax credits, and increased foreign exchange losses [2][4]. - The company has seen a consistent decline in net profit over the past two years, with decreases of 35.64% and 80.34% in 2023 and 2024, respectively [4]. Market Dynamics - The global semiconductor market is projected to recover in 2024, with an estimated sales increase of 20.3% to approximately 632.3 billion dollars, but the recovery is uneven, particularly affecting the mature process segment [5][6]. - Hua Hong Semiconductor's revenue from key sectors such as consumer electronics, industrial and automotive, communications, and computing has declined significantly, with the most severe drop in computing at 51.06% [5][6]. Strategic Direction - The company is focusing on its "8-inch + 12-inch" strategy to enhance its core competencies in power devices and embedded/non-volatile memory, while also planning to inject advanced process capabilities through Hua Li Micro [6][7]. - Hua Hong Semiconductor aims to maintain its position in the mature process market while exploring opportunities in advanced processes, driven by the growing demand for AI chips [7][8]. External Factors - The ongoing US-China trade tensions have had a limited direct impact on Hua Hong Semiconductor, but the company is closely monitoring the situation and adapting its strategies to mitigate potential risks [8][9]. - Experts suggest that the company should optimize its customer structure and leverage domestic support for the semiconductor supply chain to capture stable demand in sectors like automotive electronics and industrial automation [8][9].

Group 1: Market Activity - Southbound funds net bought Hong Kong stocks worth 4.044 billion HKD on May 9, with significant purchases in Huahong Semiconductor (516 million HKD), Pop Mart (280 million HKD), Meituan-W (249 million HKD), Alibaba-W (209 million HKD), SMIC (201 million HKD), and China Mobile (175 million HKD) [1] - Continuous net buying of Meituan for 10 consecutive days, totaling 8.98639 billion HKD [4] - Continuous net selling of Tencent and Xiaomi for 4 days, amounting to 4.76434 billion HKD and 3.99379 billion HKD respectively [5] Group 2: Company-Specific Developments - Huahong Semiconductor and SMIC reported Q1 2025 results, with significant share reductions by state investment funds, raising market concerns about the semiconductor industry's capital movements [6] - Pop Mart is focusing on enhancing consumer demand through new IP consumption initiatives as highlighted in a recent article by the Minister of Commerce [6] - Meituan launched a comprehensive service guarantee plan for instant retail, indicating a strategic push into the sector [6] - Alibaba's CEO emphasized a startup mentality to leverage opportunities in the AI technology revolution, planning significant investments in core battles [7] - China Mobile's Q1 results showed a slowdown in revenue and net profit growth, but capital expenditure reductions are expected to stabilize cash flow in the coming years [7] - Morgan Stanley raised Xiaomi's target price to 62 HKD, projecting a market cap of 2.5 trillion HKD by 2030, driven by growth in electric vehicles and AIoT [7] - UBS forecasts stable growth in the fintech sector for Chinese internet platforms, with Tencent expected to benefit significantly from this trend [8]

智通财经APP获悉，5月9日港股市场，北水成交净买入40.44亿港元，其中港股通(沪)成交净买入32.46亿 港元，港股通(深)成交净买入7.98亿港元。 北水净买入最多的个股是华虹半导体(01347)、泡泡玛特(09992)、美团-W(03690)。北水净卖出最多的个 股是小米集团-W(01810)、腾讯(00700)、山东墨龙(00568)。 港股通(深)活跃成交股 北水资金逢低抢筹芯片股。华虹半导体(01347)、中芯国际(00981)分别获净买入5.16亿、2.01亿港元。消 息面上，中芯国际、华虹公司同时披露2025年一季报。中芯国际第一季度实现归母净利润13.56亿元， 同比增长166.5%；预计二季度公司收入环比下降4%至6%，毛利率预计为18%至20%。华虹公司第一季 度销售收入5.409亿美元，同比增长17.6%；纯利375万美元，同比下跌88.2%。中芯国际和华虹公司重要 股东国家集成电路产业投资基金股份有限公司旗下全资孙公司鑫芯香港持股比例发生变动。 泡泡玛特(09992)获净买入2.8亿港元。消息面上，商务部部长王文涛在《旗帜》杂志发表署名文章称， 促进"人工智能+消费""IP+消费" ...

南向资金今日净买入超40亿港元 华虹半导体获净买入居前 智通财经5月9日电，南向资金今日净买入40.44亿港元。其中，华虹半导体、泡泡玛特分别合计获净买 入约5.16亿港元、2.80亿港元；小米集团-W遭净卖出约6.34亿港元。 ...