Golden Guard Newsletter | Guosen Securities issued a research report stating that hua hong semi (01347) released unaudited performance results: achieved sales revenue of 0.5263 billion US dollars in 3Q24 (YoY-7.4%, QoQ+10.0%), slightly above guidance (0.5-0.52 billion US dollars), gross margin was 12.2% (YoY-3.9pct, QoQ+1.7pct), slightly above guidance (10%-12%), revenue, gross margin, and capacity utilization rate all achieved quarterly growth. As the company enters 2024, capacity utilization rate is expected to increase seasonally, with estimated sales revenue of approximately 0.53-0.54 billion US dollars in 4Q24 according to the company's guidance, maintaining moderate growth, with gross margin around 11%-13%, continuous optimization of product structure and operational efficiency.

The bank stated that segmented by end markets, revenue from electronic consumer products, industrial and automotive and telecommunication sectors increased quarter-on-quarter, with corresponding growth rates of 10.9%, 11.9%, and 10.9%, while computer revenue decreased by -44.7% quarter-on-quarter; segmented by technical platforms, analog and power management, logic and RF, and standalone non-volatile memory all grew by more than 20% quarter-on-quarter, with strong demand, discrete devices increased by 7.1% quarter-on-quarter, while embedded non-volatile storage decreased by 3.3% quarter-on-quarter; segmented by process technology nodes, 55nm and 65nm, 0.15um and 0.18um, and 0.25um and above technology nodes saw rapid revenue growth.

The bank is bullish on the company's unique technology outsourcing with top customers and leading technology competitiveness. According to the company's guidance, adjustments were made to capacity forecast and expense rates. The bank expects net income of 0.107/0.17/0.295 billion US dollars from 2024 to 2026 (previously 0.108/0.203/0.419 billion US dollars), with the current stock price corresponding to a PB of 0.77 times in 2025, maintaining an 'outperform the market' rating.