SMIC(00981) 交银国际证券·2025-02-13 08:04Investment Rating - The report downgrades the investment rating for the company to Neutral from Buy, indicating that the stock price may have fully reflected the potential upside [6][7][19]. Core Views - The report highlights that while the company's performance may continue to improve, the stock price has already anticipated these changes. The long-term outlook remains positive due to the trend of domestic substitution in the wafer foundry industry and the company's leading position in the market [6][7][19]. - The report emphasizes the high capital expenditure and its potential impact on profit margins, as well as uncertainties in downstream demand and increased competition in mature processes affecting product pricing [6][7][19]. Financial Overview - Revenue projections for the company are as follows: - 2023: 8,030 million - 2025E: 10,291 million - 2027E: 903 million - 2024: 1,055 million - 2026E: 1,778 million - The report notes a significant drop in earnings per share (EPS) for 2024, with a recovery expected in subsequent years [5][39]. Market Performance - The company's stock price has increased approximately 200% since the second half of 2024, driven by improved fundamentals and increased market liquidity [6][7][19]. - The target price for the company's stock is raised to HKD 48, reflecting a price-to-book (P/B) ratio of 2.25 times for 2025, which is considered high compared to historical averages [6][7][19]. Capital Expenditure - The company has guided for capital expenditures of $7.33 billion for 2024, with expectations for 2025 to remain at similar levels, which is higher than previous market expectations [6][7][19]. - The report indicates that the company plans to expand its 12-inch wafer capacity by 50,000 pieces annually, despite the high capital expenditure [6][7][19]. Valuation Comparison - The report compares the company's valuation metrics with peers, noting that the company's P/B ratio is above the industry average, indicating a premium valuation despite lower return on equity (ROE) compared to competitors [6][7][19]. - The report also highlights that the premium of the company's A-shares over H-shares is currently at 142%, which is at the historical lower end of the range [6][7][19].