20250811-招银国际-华虹半导体-01347.HK-2Q_margin_beat,_D_G_to_HOLD_due_to_substantial_recent_share_price_gains_5页_1mb

Investment Update Summary

Key Events

1. Earnings Release:

   • Revenue in 2Q25 increased by 18.3% YoY and 4.6% QoQ to reach RMB566mn, outperforming Bloomberg consensus.
   • Gross Profit Margin (GPM) improved sequentially to 10.9%, beating guidance (7%-9%) and consensus (8.3%).
   • Net Profit Margin (NPM) rose from 0.7% in 1Q25 to 1.6%, supported by higher GPM and increased non-operating gains.

2. Utilization & ASP:

   • Utilization rate climbed to 108.3%, a record high over the last 11 quarters.
   • Average Selling Price (ASP) remained stable at US$434, with management expecting stabilization in 12-inch products.

3. Guidance:

   • 3Q25 revenue guidance (US$620mn-640mn) sets a mid-point growth of 19.7% YoY and 11.3% QoQ, reflecting seasonal acceleration.
   • Management anticipates flattish GPM at 10%-12% due to depreciation headwinds, with a potential single-digit ASP increase in H2 25E.

Valuation & Targets

• Downgrade to HOLD: Previous TP HK$37.50 revised to HK$48, based on a 1.7x 2025E P/B (0.5SD above 5-year mean).
• Target Price Band: 1.36x to 2.82x 1-year forward P/B.
• Current Valuation: Stock has surged ~50% in the past two months; fair value reflects business stabilization and cyclical troughing.

Financial Projections

• Revenue Growth:
  • 2025E: 20.9% YoY growth to HK$2.4bn, driven by capacity expansion (52% of Fab9 up and running).
  • 2026E: Further expansion to HK$3.0bn (24.1% YoY).
• GPM/Net Margin:
  • GPM projected at 10.9%-14.7% in 2025E-2026E, balancing high utilization with depreciation costs.
  • Net margin shows significant improvement in 2024E-2026E (from -134mn to +258mn).

Key Drivers & Risks

• Upside Catalysts: Stronger-than-expected demand, ASP increases, China localization theme.
• Downside Risks: Weaker demand, ASP pressure, geopolitical tensions (e.g., USD devaluation impacting D&A costs).

Recommendation

Hua Hong Semi (1347 HK) is fairly valued; HOLD recommendation on sustainability concerns. Focus on ASP stability and capacity expansion for medium-term growth, but cautious on currency risks.