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中芯国际(0981.HK):24H2中低端消费电子补货需求增加 Q3营收及毛利率指引积极

SMIC (0981.HK): Demand for 24H2 mid- and low-end consumer electronics restocking increased, Q3 revenue and gross margin guidance was positive

第一上海 ·  Aug 20

Performance summary: 2024Q2's revenue was $1.9 billion, up 21.8% year over year and 8.6% month on month, slightly higher than the agreed forecast of $1.84 billion. The company's production capacity increased by 0.0225 million chips month-on-month to 0.837 million equivalent 8-inch wafers during the quarter. The capacity utilization rate was 85.2%, up 6.9 pcts year on year, and 4.4 pcts month-on-month. Wafer ASP reached $836, down 16.9% year over year and 7.8% month on month. The company's gross margin increased 0.2 pcts month-on-month to 13.9%. Operating profit was $0.09 billion, up 9.2% year over year. Net profit to mother fell 59.1% year over year to $0.16 billion, and the net profit margin was 8.7%. Earnings per share were $0.02. The company's 2024Q3 revenue rose 13%-15% month-on-month to 2.15-2.19 billion US dollars, higher than the market's consensus forecast of 1.87 billion US dollars, and gross margin of between 18% and 20%, higher than the agreed forecast of 11.3%.

Demand for downstream consumer electronics restocking increased, 24H2 wafer ASP and capacity utilization improved: Demand for consumer electronics orders continued to pick up this quarter, contributing 35.6% of revenue, and a year-on-year increase of 9.1 pcts. Among them, orders for games, toys, and smart furniture increased significantly. The second half of the year benefited from a moderate recovery in the consumer market combined with a recovery in smartphone shipments, which drove the company's 12-inch wafer shipments to increase, and production capacity utilization gradually recovered to 85%. In terms of price, the price increase for PMIC and CIS products in the second half of the year is expected to drive Wafer ASP to gradually rebound after bottoming out, and the company's annual gross margin is expected to reach 16.7%. Currently, the company's share in the global foundry industry is 5.5%, and the share is expected to rise to 8.0% by the end of the year, driving a 26% year-on-year increase in revenue to 7.9 billion US dollars.

The construction of 12-inch production capacity accelerated, and depreciation expenses for the whole year bucked the trend: the company's capital expenditure increased 0.8 pcts month-on-month to 2.25 billion US dollars this quarter, and depreciation and amortization expenses increased 6.8 pcts month-on-month to 0.8 billion US dollars. The company's capital expenditure guide for the full year 2024 was 7.5 billion dollars, of which 6.2 billion was used to purchase equipment, but the contrarian production expansion strategy will result in a 24% year-on-year increase in depreciation expenses for the year. In terms of production capacity, the construction of a 12-inch production capacity has been accelerated, and 0.06 million film production capacity will be added throughout the year. Demand for 24H2 is expected to come mainly from restocking downstream smartphone components, large-screen TVs, and IoT device products. We expect the company's average monthly production capacity equivalent to 8-inch wafers will reach 0.85 million chips in 2024.

Target price HK$21.00, purchase rating: We believe that the recovery in the semiconductor cycle combined with the recovery in demand for downstream consumer electronics products will drive the company's capacity utilization rate to gradually rise in the next few quarters. We expect the company's revenue CAGR of 27% and net profit CAGR of 14.1% over the next three years. Based on the company's profit forecast for 2024, we gave the company a target price of HK$21.00 based on a valuation center of 1.0 times PB, which is a purchase rating of 23.55% compared to the current stock price.

Risk factors: risk of production capacity expansion falling short of expectations, risk of semiconductor cycle downturn, risk of downstream demand recovery falling short of expectations.

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