Glonghui, January 17 | Goldman Sachs lowered the target price of Huahong Semiconductor by 13.7%, from HK$27.8 to HK$24, maintaining a “buy” rating. The bank kept its 2023 forecast basically unchanged. The overall market recovery was less visible, and revenue for 2024-2028 was reduced by 4%-7%. Since the bank's expected utilization rate and average sales price may take more time to recover, the bank lowered gross margin by 2.5-5.7 percentage points for 2024-2028, and lowered its net profit forecast by 43%, 30%, 14%, 11%, and 11%. Goldman Sachs said that Huahong Semiconductor completed the hoisting of the steel roof at its 12-inch fab in Wuxi in December 2023, indicating that construction is on the right track. Management expects to have the plant and equipment ready by the end of this year, and plans to increase production capacity to 83,000 wafers per month over the next two to three years. Goldman Sachs remains optimistic about this, and management revealed that it aims to generate $2.9 billion in revenue each year after fully utilizing its factory. Huahong Semiconductor's fourth quarter revenue and gross margin for the fourth quarter of 2023 declined compared to the previous quarter, mainly due to a decline in average unit selling price (ASP) and potential inventory write-off. Management expects stable sales in the fourth quarter and expects stable ASP in the first quarter. Goldman Sachs expects Huahong's revenue and profit margins to stabilize in the first quarter of 2024, but the possibility of a strong recovery in the short term is still low, and foundry inventory is still above historical levels. The gradual recovery of terminal markets such as smartphones and PCs will take more time.
大行评级|高盛:下调华虹半导体目标价至24港元 下调2024-2028年盈测
Bank Rating | Goldman Sachs: Lowering Huahong Semiconductor's Target Price to HK$24, Lowering the 2024-2028 Earnings Test
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