Zhitong Financial APP learned that CICC issued a research report that maintained Hua Hong Semiconductor's "outperform industry" rating in 01347, taking into account the possibility of raising wafer prices, revenue increased by 29% in 2022 / 23 to $25.44 / 2.837 billion (up 56% by 12%) and net profit by 40% by 34% to $3.47 / 402 million (up 32.6%). 15.8%). In addition, due to the downward valuation center of Hong Kong stocks, the target price was reduced by 37.9% to HK $36, corresponding to 1.9x/1.7xP/B, which is 23.5% higher than the current upside space.
Events:The company's 1Q22 had revenue of $595 million in a single quarter, slightly exceeding the previous $560 million performance guidance, which the bank believes was mainly driven by an increase in average sales unit prices. Gross profit margin is 26.9%, the increase in average sales unit price is offset by government subsidy audit adjustment, employee bonus and depreciation cost rise, resulting in a month-on-month decline, but if the government subsidy audit adjustment is excluded, the bank estimates that the corresponding gross profit margin will be about 3ppt higher than the disclosed value, slightly higher than the previous performance guidance. 1Q22's capital expenditure is $124.1 million, of which $107.5 million is for Huahong Wuxi and $16.6 million is for the 8-inch plant.
The main points of CICC are as follows:
The company's 1Q22 by technology platform has seen double-digit year-on-year growth in all kinds of business, especially flash memory and power management chips.Huahong 8-inch factory 1Q22 single-quarter revenue of US $332.6 million, YoY+32.9%,QoQ+3.1%; gross profit of 38.6% Magi YoYue 11.3 ppt QoQmuri 6.8ppt (mainly due to the audit adjustment of government subsidies). Huahong Wuxi 1Q22 single-quarter revenue of US $262 million, YoY+379.5%,QoQ+27.4%, production capacity steadily released; gross profit margin 12% YoYQing 4.7 pptJo QoQmuri 0.1ppt.
The company expects 2Q22's quarterly revenue to be about $615 million (QoQ+3.4%) and gross profit margin of 28% to 29% (QoQ+1.1 to 2.1ppt).The company implements closed management, and the capacity utilization rate of 1Q22 has been maintained at about 95%. The company expects that 2Q22's performance will also be good.
The company kept its capital expenditure unchanged in 2022 and equipment procurement was not affected.Huahong Wuxi 1Q22 monthly production capacity and output of 65000 pieces, the company said at the performance meeting that the second phase of production expansion has been implemented, has been moved into four equipment, production capacity is expected to reach 95000 pieces per month by the end of this year or early next year, with annual capital expenditure of about $1.5 billion, 12 inches corresponding to $1.4 billion and 8 inches corresponding to $180 million.
Recently, Taiwan Semiconductor Manufacturing Co Ltd announced that wafer prices will be raised by 5% Murray 9%, and Samsung will increase wafer prices by 15% Murray 20%.Against the backdrop of rising global labor and material costs, the bank believes that Hua Hong Semiconductor is more likely to raise wafer prices in the next few quarters of this year to cope with inflationary pressures.
Risk Tips:The trend of average sales price is not as expected; capacity utilization is not as expected.