2Q22 revenue hit another all-time high, and the 3Q22 guidance was basically flat. The company's 2Q22 achieved sales revenue of US $621 million (YoY 79.4% QoQ 4.4%), a record high. The profit during the period was US $53 million (YoY43.2%,QoQ-47.8%), mainly due to large foreign currency exchange losses in the current quarter. Gross profit margin is 33.6% (YoY + 8.8pct QoQ + 6.7pct), capacity utilization is 109.7%, and shipping is equivalent to 1036 thousand eight-inch wafers (YoY 41.9% QoQ-2.0%). The company directs that 3Q22's sales are about $625 million (YoY 38.6% dome QoQ 0.6%), with a gross profit margin of about 33% and 34%.
Huahong Wuxi: the utilization rate of capacity is 109.3%, and the gross profit margin is 19.6%. The gross profit margin of 2Q22 Wuxi plant is 19.6% (YoY + 16.3 pctjournal QoQ 7.6pct), and the capacity utilization rate is 109.3% (1Q22 7.6pct 103.9%), which continues to be fully loaded. Single-quarter shipments are equivalent to 469 thousand 8-inch wafers (YoY 154.9% YoY QoQ-3.5%), and ASP is 1280.1 US dollars / 12-inch wafers (QoQ 5.5%). Wuxi plant capacity continued to improve the company's 55nm and 65nm, 90nm and 95nm process node sales revenue to 1.14, 115 million (YoY274.0%, 132.9%). The capital expenditure of 2Q22 is 112 million US dollars, and the monthly production capacity of Wuxi plant is expected to increase from the current 65 thousand to 94.5 thousand by the end of 2022.
Shanghai 8 inch factory: achieve 110% capacity utilization to reach a new high, and the demand for characteristic process is strong. The gross profit margin of 2Q22's 8-inch foundry is 44.2% (YoY 12.6% YoY QoQ 5.6%), mainly due to the increase in the average price of products (ASP:624.3 US dollars / piece, QoQ 7.1%). Capacity utilization rate is 110.0% (1Q22:
107.7%), continue to be fully loaded. Single-quarter shipments of 8in wafers of 567,000 (YoY 3.8% YoY QoQ-0.7) are mainly due to continued strong demand for MCU, super junction, MOSFET and IGBT.
Science and Technology Innovation Board IPO completed listing tutoring, Wuxi Phase II production expansion is expected to speed up. On May 12, 2022, Hua Hong Semiconductor announced that the board of directors had approved the proposal for RMB share issuance, special authorization and related matters. The company intends to raise 12.5 billion yuan to invest in Huahong manufacturing Wuxi project, 2 billion yuan for 8-inch wafer plant optimization and upgrading project, 2.5 billion yuan for process and technological innovation and research and development projects. On July 27, 2022, Guotai Junan Securities issued a report on the initial public offering of shares of Hua Hong Semiconductor Co., Ltd. and its listing in Science and Technology Innovation Board.
We are optimistic about Huahong's 12-inch wafer production capacity in Wuxi under the "8x12" strategy, and the expansion of the "featured IC+PowerDiscrete" featured process technology platform promotes product portfolio improvement, thus driving continuous improvement in performance. Revenue from 2022 to 2024 is expected to be US $24.2, 2.75 and US $3.00 billion, respectively, and BPS is US $2.85 and 2.83.1 respectively. The "buy" rating is maintained at 1.37x 2022 PB.
Risk tips: downstream demand slows down; the introduction of new processes is not as expected; production expansion is not as expected.