Morgan Stanley released a research report indicating that the stock price of SMIC (01347.HK) has risen 21% since the beginning of the year. The bank believes that the relevant stock price performance responds to the business recovery after the first quarter of the company's fiscal year 2024, and points out that the stock price still has 25% upside. The bank stated that SMIC's production capacity utilization rate has now recovered to over 100%, and prices are expected to rise 10% in the second half of this year. In addition, SMIC's business recovery speed is higher than the bank's expectations, which will lead to an upward revision of the company's second quarter 2024 revenue guidance.
Morgan Stanley also expects that under the promotion of the improvement of wafer factory utilization, the rise of wafer prices, and the improvement of product structure, SMIC's gross profit margin performance from the second half of 2024 to the first half of 2025 will be improved from 6.4% to 17.1%. The target price has been raised from RMB17 to RMB28, and the rating has been upgraded from 'synchronous with the broader market' to 'shareholding'. (js/k)
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