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华虹半导体(01347.HK):8寸业务稳定增长+12寸产能持续提高

Huahong Semiconductor (01347.HK): Steady growth in 8-inch business+continuous increase in 12-inch production capacity

國泰君安國際 ·  Aug 23, 2021 00:00

Hua Hong Semiconductor is mainly engaged in integrated circuit manufacturing, with advanced 8-inch and 12-inch advanced process wafer foundry production lines, is the world's leading featured process pure wafer foundry. Revenue in the second quarter of 2021 rose 53.6 per cent year-on-year to $346 million, while net profit increased nearly 30-fold to $37.2 million, mainly due to the continuous release of production capacity on the 12-inch production line and a sharp reduction in related business losses.

The company's 8-inch wafer foundry business has grown steadily, and the company's profits have further improved: affected by the reduction in semiconductor production capacity caused by the epidemic and the increased demand caused by the rapid development of the technology industry, there is a global shortage of chips. The company as a mature process wafer foundry head enterprise, the main business income is growing steadily. In the second quarter of 2021, the revenue of the 8-inch wafer foundry business increased by 21.4% year-on-year to US $262 million; the gross profit margin increased to 31.6% from 27.3% in the first quarter, contributing a net profit of US $51.3 million and a net profit rate of 19.6%. At the end of the second quarter, capacity utilization increased by 5.3% month-on-month to 109.5%, which has been running at full capacity for several months in a row. Superimposing the recent general price increases in the semiconductor industry, the revenue of the 8-year-old foundry business is expected to grow steadily this year.

The "8-12" strategy has made steady progress, and the 12-inch production capacity has continued to increase: the 12-inch production line was completed and put into use in 2019, and the subsequent rapid expansion rate has been maintained. Huahong's advanced characteristic technology has strong market vitality, embedded flash memory, analog circuit and other process platforms have been rapidly developed and successfully developed on the 12-inch production line, and customer products have been quickly introduced, supporting the production capacity growth of the production line. Capacity utilization remained fully loaded in the second quarter, reaching 104%; the production capacity of the 12-inch production line in the second quarter has reached 48,000 pieces per month, and it is expected to reach 65,000 pieces per month by the end of the year; after the first EBITDA became a regular worker for the first time in the first quarter, it increased by 208.4% to US $29.9 million in the second quarter. The company's loss on the 12-inch production line was greatly reduced, and profits further increased.

Business is improving in the third quarter: Hua Hong Semiconductor's production expansion plan was implemented earlier, and the earlier capacity release is conducive to Huahong seizing more market share in the global imbalance between chip supply and demand. Huahong's revenue guidance for the third quarter was $410 million, up 18 per cent from a month earlier, significantly higher than Taiwan Semiconductor Manufacturing Co Ltd / SMIC's 11 per cent quarter-on-quarter growth guidance of 3 per cent.

We are optimistic about the profit growth of Huahong in the third quarter.

Investment advice: the current average target price of Hua Hong Semiconductor Bloomberg market is $54.417, corresponding to 28.8% of the rising space, it is recommended to buy on the bargain.

The translation is provided by third-party software.


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