What happened: 2Q22 achieved revenue of US $621 million, up 79% from the same period last year and 4% from the previous revenue guidance of US $615 million, mainly due to a 7.2% increase in 8-inch ASP compared with the previous month-on-month increase of 7.2%, while a slightly lower-than-expected 3.5% decline in 12-inch shipments. The company's overall gross profit margin is 33.6%, which is much higher than the upper limit of 28% of the guide range, mainly due to the higher-than-expected price increase of 8 inches, which makes the 8-inch gross profit margin reach 44%. Realized operating profit of US $138 million, up 63% from the previous quarter; realized net profit of US $84 million, down 18% from the previous month, and corresponding net profit margin of 13.5%, mainly due to large foreign currency exchange losses in the current quarter.
The price increase is the main factor driving the company's 2Q22 revenue growth month-on-month: 1Q22's 8-inch production line achieved revenue of US $354 million, an increase of 35% over the same period last year and 6.4% month-on-month growth, in which shipments were relatively flat, while ASP increased by 7% to US $624. We think this is mainly due to the high magnificence of downstream subdivided track power devices and analog power supplies. And the company has strong technical advantages in MCU, power devices and other fields. The price increase drives the company's 8-inch EBITDA rate to 50 per cent from 39 per cent of 1Q22.
2Q22's 12-inch production line achieved revenue of US $267 million, an increase of 217% over the same period last year and 1.8% month-on-month growth, of which ASP increased by 5.5% month-on-month to US $569, which is still a long way from 8-inch ASP, and there is room for further improvement in the future. 12-inch shipments fell 3.5% month-on-month, which we think is mainly due to the company's shipping rhythm in line with the adjustment of customers. The 12-inch EBITDA rate fell to 11% from 34% of 1Q22, mainly due to exchange losses caused by the appreciation of the dollar.
Affected by capacity constraints, the company directed 3Q22 revenue to increase slightly month-on-month. 0.7%:1Q22 's 8-inch and 12-inch capacity utilization rates are 110% and 109%, respectively, which have been maintained at high levels. At present, the company's additional 12-inch 30K monthly production capacity is not expected to be expanded until the end of the 22nd, which will mainly contribute to the increase in revenue in 23 years; at the same time, the company conservatively estimates that the new production capacity of Wuxi Phase II will be launched in 2026. Therefore, we believe that the revenue growth of 2H22 will be mainly driven by price increases, of which 12 inches have more room for price increases because the price is relatively lower than 8 inches, while further price increases may face some pressure in 23 due to the overall downward impact of the industry boom. Taking into account capacity constraints, the company directed 3Q22 revenue of US $625 million, corresponding to a slight month-on-month increase of 0.7%; the guided gross profit margin range is 33% 34%, which we believe is mainly due to the higher 8-inch ASP.
Earnings forecast, valuation and rating: maintain the strong growth momentum of the company's fundamentals, the company's capacity utilization rate remains high, 8-inch fundamentals stable, 12-inch positive. 12-inch production expansion opens up new growth space, maintaining the forecast 22-24 net profit of $333 million, $438 million, corresponding to a year-on-year increase of 27%, 31%, 8%. The current share price of HK $26.15 corresponds to 13 times PE in 22 years. The continuous increase in the price of the company's products has led to an increase in profitability, and further production expansion of 12 inches is expected to open up new growth space, drive the company's valuation higher and maintain its "buy" rating.
Risk hint: the production capacity of the newly built 12 inches is lower than expected; the valuation of the semiconductor sector fluctuates systematically.