Glonghui, Feb. 8 | Jefferies released a report stating that SMIC's revenue for the last quarter increased 4% year-on-year to US$1.7 billion, slightly higher than expected; gross margin fell 15.6 percentage points to 16.4%, 0.9 percentage points lower than expected, mainly due to lower average product prices and lower utilization rate (UTR) of less than 80%; net profit fell 55% year-on-year, exceeding the bank's and market expectations. The bank mentioned that SMIC's revenue guidelines for the first quarter of this year were flat to 2% quarterly growth, and gross margin was expected to drop by about 6 percentage points to between 9% and 11%, and capital expenditure remained unchanged at about 7.5 billion US dollars. Furthermore, the bank lowered SMIC's revenue forecast for 2024 to 2026 by 16%, mainly due to adverse effects on average product prices and utilization rates, and weak demand but high depreciation and amortization (D&A), which may put greater pressure on gross profit and profitability in the next few years. The bank lowered its target price from HK$22 to HK$16, maintaining a “hold” rating.