HUA HONG SEMICONDUCTOR LTD(1347.HK):NEW CAPACITY TEMPORARILY LOWERS UTILISATION AND MARGINS
HUA HONG SEMICONDUCTOR LTD(1347.HK):NEW CAPACITY TEMPORARILY LOWERS UTILISATION AND MARGINS
Hua Hong's 4Q23 results were broadly in line while new capacity added at Wuxi Fab7 ahead of schedule weighed on 1Q24 UTR and GPM outlook. We remain positive on semiconductor market recovery in 2024 and Hua Hong's order momentum driven by domestic clients and new products to digest the new capacity. Hua Hong remains an attractive stock to us with 0.5x P/B and US$3.7bn net cash position. We rate Hua Hong BUY with HK$23.5 TP, based on 0.82x P/B (was 0.85x).
華虹23年第四季度的業績基本一致，而無錫Fab7提前增加的新產能打壓了24年第一季度的UTR和GPM前景。我們對2024年半導體市場的復甦以及由國內客戶和消化新產能的新產品推動的華虹的訂單勢頭保持樂觀。對我們來說，華虹仍然是一隻具有吸引力的股票，市盈率爲0.5倍，淨現金狀況爲37億美元。根據0.82倍市盈率（原爲0.85倍），我們對華宏的買入評級爲23.5港元。
Key Factors for Rating
評級的關鍵因素
4Q23 financials: Revenue decreased by 28% YoY and 20% QoQ to US$455m, at the low end of guidance, due to slow MCU and power discrete demand. GPM declined by 12.1ppts QoQ to 4.0%, at the higher end of guidance. OPM recorded -16.8%, due to decrease in government grants for R&D and increasing engineering wafer costs and labour expenses of Wuxi Fab9. NI was US$35m, beating BOCIe and consensus due to the increase of government subsidy and forex gain.
23年第四季度財務狀況：由於微控制器和功率分立需求放緩，收入同比下降28％，環比下降20％，至4.55億美元，處於預期的低端。GPM環比下降12.1個百分點至4.0％，處於預期的較高水平。由於政府研發撥款減少以及無錫Fab9的工程晶圓成本和勞動力支出增加，OPM錄得了-16.8％。由於政府補貼的增加和外匯收益，NI爲3500萬美元，超過了BoCie和市場共識。
Semiconductor on recovery: Mgmt. saw market and order book recovery recently thanks to the end of destocking and rapid growth in new IoT, AI and smartphone products. CIS and PMIC have been strong since 4Q23 while power electronics and MCU started to bottom out. We believe from a sequentially perspective, Company's operating matrix will continue improving.
半導體復甦：由於去庫存的結束以及新的物聯網、人工智能和智能手機產品的快速增長，Mgmt. 最近出現了市場和訂單量復甦。自23年第四季度以來，CIS和PMIC一直表現強勁，而電力電子和微控制單元開始觸底。我們相信，從順序的角度來看，公司的運營矩陣將繼續改善。
2024 guidance: 1Q24 GPM guidance is still weak but it is mainly due to the capacity expansion of Wuxi Fab7 ahead of schedule and increasing D&A. Thanks to stronger demand, ASP has been stable in 1Q24. Mgmt's current strategy is to ramp UTR to above 95% as quickly as possible before considering further room to lift ASP and margins.
2024年預期：24年第一季度GPM指引仍然疲軟，但這主要是由於無錫Fab7的產能提前擴張以及D&A的增加。由於需求強勁，ASP在24年第一季度一直保持穩定。管理層目前的策略是儘快將UTR提高到95％以上，然後再考慮進一步提高ASP和利潤率。
Key Risks for Rating
評級的主要風險
US-Sino relationship; intensifying mature node price competition; faster-than- expected product migration to advanced node; macro and end demand risk.
中美關係；成熟節點價格競爭加劇；產品向高級節點遷移速度快於預期；宏觀和終端需求風險。
Valuation
估價
We derive our new HK$23.5 target price based on 0.82x P/B, -1sd below its five year average multiple of 1.5x. Our target price represents 87x/17x/8x 2024E/25E/26E EPS.
我們根據0.82倍的市盈率得出新的23.5港元目標價，比其五年平均倍數1.5倍低-1sd。我們的目標價格爲87x/17x/8x 2024E/25E/26E每股收益。
We believe the current share price of Hua Hong at 0.5x P/B with more than US$3.7bn net cash position offers high downside risk protection after the recent sell-off. We believe it is a good time to accumulate at a low valuation when the semiconductor industry starts the recovery trajectory.
我們認爲，在最近的拋售之後，華虹目前的股價爲市盈率的0.5倍，淨現金狀況超過37億美元，爲下行風險提供了很高的下行風險保護。我們認爲，當半導體行業開始復甦軌跡時，現在是以低估值進行積累的好時機。
譯文內容由第三人軟體翻譯。