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JPM Upgrades SMIC (00981.HK) to Neutral, Raises TP to HKD67
Recommend 29 Positive 35 Negative 13 |
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JPMorgan issued a research report stating that SMIC (00981.HK) reported 1Q gross margin slightly above expectations, benefiting from selective price increases, while its 2Q revenue guidance significantly exceeded expectations, reaching QoQ growth of 14% to 16%. The bank noted that although AI-related demand and localization trends have driven price hikes for certain products such as BCD, analog chips, power management and memory products (together accounting for about 40% to 50% of revenue), with part of the impact already reflected in 1Q and to be further realized in 2Q, it also expects consumer electronics demand to weaken in 2H due to front-loaded shipments in 1H and higher end-product prices. The bank raised its 2026 and 2027 earnings forecasts for SMIC by about 15% to reflect broader price increases. It now expects EPS to reach USD0.1363 and USD0.1445 for 2026 and 2027, representing YoY growth of 59% and 6%, respectively. Despite risks to consumer demand in 2H, given the broader-than-expected scope of price hikes, JPM upgraded SMICs investment rating from Underweight to Neutral and raised its TP from HKD57 to HKD67, implying about 2.8x price-to-book ratio. The bank believes a clearer margin recovery path (such as broader price increases sufficient to offset rising depreciation) would be needed to drive further re-rating, while downside risks stem from weaker-than-expected consumer demand weighing on pricing. (ad/da) Auto-translated by AI This article was automatically translated by AI, the original language version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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