<Research>HSBC Research Lifts SMIC (00981.HK) TP to $68 as Gross Margin Outlook Misses, but LT Growth Remains Solid
SMIC's Financial Performance: SMIC reported a 2Q25 revenue of US$2.21 billion, which was a slight decline of 2% QoQ but an increase of 16% YoY, exceeding market expectations. The gross margin improved to 20.4%, driven by better product mix and capacity utilization despite a 6.4% drop in average selling price.
Analyst Forecast Adjustments: HSBC Global Research lowered its EPS forecast for SMIC by 15% for 2025 due to weaker-than-expected guidance, while maintaining its target prices for the company's shares and keeping a "Buy" rating based on long-term growth prospects.
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CICC Reaffirms Outperform Rating for SMIC (00981.HK); 4Q25 Results Meet Expectations
SMIC 4Q25 Results: SMIC reported H-share revenue of USD2.489 billion for 4Q25, a 4.5% increase QoQ, with a gross margin of 19.2%, down from the previous quarter, aligning with broker forecasts.
2025 Full-Year Performance: The company's full-year revenue for 2025 reached USD9.327 billion, a 16.2% YoY increase, with a gross margin of 21%, up 3 percentage points YoY.
1Q26 Guidance: SMIC anticipates flat revenue QoQ for 1Q26, with a gross margin expected between 18-20%, consistent with broker estimates, and projected revenue growth for 2026 to surpass peers.
Broker Ratings: M Stanley maintained an Overweight rating for SMIC, citing its strong position in wafer manufacturing, with target prices set at RMB150 for A-shares and HKD100 for H-shares.
Citi Increases Price Targets for SMIC and HUA HONG SEMI to HKD 75 and HKD 115
Financial Results Overview: SMIC and HUA HONG SEMI's 4Q25 financial results were in line with company guidance, but the 1Q26 outlook was slightly below expectations.
Market Performance: SMIC's stock rose by 0.501% and HUA HONG SEMI's by 0.854%, with significant short selling activity reported for both companies.
Growth Prospects: Both companies expect growth driven by localization demand for semiconductors in China and AI opportunities, despite challenges from increased depreciation and competition affecting profit margins.
Target Price Adjustments: Citi raised SMIC's target price from HKD53 to HKD75 (Neutral rating) and HUA HONG SEMI's from HKD105 to HKD115 (Buy rating).
HSI Declines by 392 Points; KNOWLEDGE ATLAS Surges 5% Amid Ongoing AI Stock Rally
Market Overview: The HSI opened 1.5% lower at 26,640, with significant declines in tech stocks such as TENCENT and KUAISHOU, which dropped 1.7% and 1.9% respectively.
Short Selling Activity: Notable short selling was observed in several tech stocks, including BIDU and BILIBILI, with ratios exceeding 20%, indicating bearish sentiment among investors.
PPI Data: China's Producer Price Index (PPI) YoY for January showed a decline of 1.4%, slightly better than the previous value of -1.9% and above the forecast of -1.5%.
AI Stock Rally: The AI sector saw gains with MINIMAX-WP rising 11.9% after launching a new programming model, while KNOWLEDGE ATLAS also experienced a significant increase of 16.9%.
SMIC Faces Shortages and Rising Prices for Memory and BCD
Company Performance: SMIC reported a short selling of $139.92M with a ratio of 4.881%, indicating market activity around its stock.
Product Supply and Pricing: The company noted a short supply of memory and BCD products, leading to rising prices, and plans to focus on supporting iterative products to stabilize prices.
Market Demand: SMIC's executives stated that demand for mid-to-low-end mobile phones remains stable, with historical trends showing that insufficient supply can amplify demand and increase prices.
Analyst Insights: Goldman Sachs indicated that SMIC's operating profit for Q4 2025 exceeded expectations, reflecting positive financial performance.
Nomura Maintains Neutral Rating on SMIC, Anticipates Mid to High Double-Digit Revenue Growth This Year
SMIC's Financial Performance: Nomura's report shows that SMIC met expectations for wafer revenue and gross margin in Q4 2025, with guidance for flat revenue and a gross margin of 18-20% in Q1 2026.
Future Growth Projections: Management expects SMIC's full-year revenue growth for 2026 to surpass peers, with Nomura predicting actual growth in the mid to high double digits.
Broker Rating and Target Price: Nomura maintains a Neutral rating on SMIC, setting a target price of HKD 75.
Short Selling Activity: SMIC has experienced significant short selling, amounting to $117.74 million, with a short selling ratio of 7.421%.
CLSA Reduces Earnings Projections for SMIC (00981.HK) While Maintaining Outperform Rating
4Q25 Results and Guidance: SMIC's 4Q25 results and 1Q26 guidance met expectations, with ongoing demand for consumer electronics despite memory shortages.
Memory Shortage Outlook: The company anticipates that the memory shortage will improve within 9-12 months.
Capital Expenditure Plans: SMIC plans to maintain its capital expenditure at US$8.1 billion for 2026, with a projected 30% increase in depreciation expenses year-over-year.
Earnings Forecast Adjustments: CLSA has reduced its earnings forecasts for SMIC for 2026 and 2027 by 14% and 11%, respectively, while keeping target prices and ratings unchanged.
CICC Reaffirms Outperform Rating for SMIC (00981.HK); 4Q25 Results Meet Expectations
SMIC 4Q25 Results: SMIC reported H-share revenue of USD2.489 billion for 4Q25, a 4.5% increase QoQ, with a gross margin of 19.2%, down from the previous quarter, aligning with broker forecasts.
2025 Full-Year Performance: The company's full-year revenue for 2025 reached USD9.327 billion, a 16.2% YoY increase, with a gross margin of 21%, up 3 percentage points YoY.
1Q26 Guidance: SMIC anticipates flat revenue QoQ for 1Q26, with a gross margin expected between 18-20%, consistent with broker estimates, and projected revenue growth for 2026 to surpass peers.
Broker Ratings: M Stanley maintained an Overweight rating for SMIC, citing its strong position in wafer manufacturing, with target prices set at RMB150 for A-shares and HKD100 for H-shares.
Citi Increases Price Targets for SMIC and HUA HONG SEMI to HKD 75 and HKD 115
Financial Results Overview: SMIC and HUA HONG SEMI's 4Q25 financial results were in line with company guidance, but the 1Q26 outlook was slightly below expectations.
Market Performance: SMIC's stock rose by 0.501% and HUA HONG SEMI's by 0.854%, with significant short selling activity reported for both companies.
Growth Prospects: Both companies expect growth driven by localization demand for semiconductors in China and AI opportunities, despite challenges from increased depreciation and competition affecting profit margins.
Target Price Adjustments: Citi raised SMIC's target price from HKD53 to HKD75 (Neutral rating) and HUA HONG SEMI's from HKD105 to HKD115 (Buy rating).
HSI Declines by 392 Points; KNOWLEDGE ATLAS Surges 5% Amid Ongoing AI Stock Rally
Market Overview: The HSI opened 1.5% lower at 26,640, with significant declines in tech stocks such as TENCENT and KUAISHOU, which dropped 1.7% and 1.9% respectively.
Short Selling Activity: Notable short selling was observed in several tech stocks, including BIDU and BILIBILI, with ratios exceeding 20%, indicating bearish sentiment among investors.
PPI Data: China's Producer Price Index (PPI) YoY for January showed a decline of 1.4%, slightly better than the previous value of -1.9% and above the forecast of -1.5%.
AI Stock Rally: The AI sector saw gains with MINIMAX-WP rising 11.9% after launching a new programming model, while KNOWLEDGE ATLAS also experienced a significant increase of 16.9%.
SMIC Faces Shortages and Rising Prices for Memory and BCD
Company Performance: SMIC reported a short selling of $139.92M with a ratio of 4.881%, indicating market activity around its stock.
Product Supply and Pricing: The company noted a short supply of memory and BCD products, leading to rising prices, and plans to focus on supporting iterative products to stabilize prices.
Market Demand: SMIC's executives stated that demand for mid-to-low-end mobile phones remains stable, with historical trends showing that insufficient supply can amplify demand and increase prices.
Analyst Insights: Goldman Sachs indicated that SMIC's operating profit for Q4 2025 exceeded expectations, reflecting positive financial performance.
Nomura Maintains Neutral Rating on SMIC, Anticipates Mid to High Double-Digit Revenue Growth This Year
SMIC's Financial Performance: Nomura's report shows that SMIC met expectations for wafer revenue and gross margin in Q4 2025, with guidance for flat revenue and a gross margin of 18-20% in Q1 2026.
Future Growth Projections: Management expects SMIC's full-year revenue growth for 2026 to surpass peers, with Nomura predicting actual growth in the mid to high double digits.
Broker Rating and Target Price: Nomura maintains a Neutral rating on SMIC, setting a target price of HKD 75.
Short Selling Activity: SMIC has experienced significant short selling, amounting to $117.74 million, with a short selling ratio of 7.421%.
CLSA Reduces Earnings Projections for SMIC (00981.HK) While Maintaining Outperform Rating
4Q25 Results and Guidance: SMIC's 4Q25 results and 1Q26 guidance met expectations, with ongoing demand for consumer electronics despite memory shortages.
Memory Shortage Outlook: The company anticipates that the memory shortage will improve within 9-12 months.
Capital Expenditure Plans: SMIC plans to maintain its capital expenditure at US$8.1 billion for 2026, with a projected 30% increase in depreciation expenses year-over-year.
Earnings Forecast Adjustments: CLSA has reduced its earnings forecasts for SMIC for 2026 and 2027 by 14% and 11%, respectively, while keeping target prices and ratings unchanged.
