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CMBI Initiates Coverage on SMIC (00981.HK) with Buy, TP HKD110
2026-06-29 11:43:49 CMBI released a report initiating coverage on SMIC (00981.HK) H-shares with a Buy rating and a TP of HKD110. The broker noted that SMIC is China癒礎s core wafer foundry platform, combining domestic scale, broad coverage in mature and specialty process technologies, advanced logic capabilities, and deep engagement with China癒礎s fabless ecosystem. Its investment focus is now shifting from capacity expansion to capacity conversion (i.e., converting prior capital expenditure into qualified 12-inch wafer output), maintaining high capacity utilization, enhancing product mix to lift average selling prices, and full ownership of SMNC to drive overall earnings growth. The broker forecasts that, supported by high capacity utilization, favorable product mix improvements in average selling prices, and gradual capacity conversion at existing 12-inch fabs, SMIC癒礎s revenue will grow by 22%, 14% and 12% in 2026, 2027 and 2028, respectively. The company guided for revenue growth of 14% to 16% QoQ and gross margin of 20% to 22% for the next quarter, confirming stronger shipment volumes, improved average selling prices and faster ramp-up of high-value capacity. In addition, AI demand supports its broader chip product offerings, while localization demand will continue to drive domestic customers toward local foundry capacity. CMBI expects depreciation to remain a key factor constraining margin recovery. However, SMIC癒礎s strategic scarcity in China and improving revenue quality should support an attractive risk-reward profile. The broker applies a 5x 2027 forecast price-to-book ratio to its 2027 forecast book value per share of USD2.8 (equivalent to approximately HKD22.2 based on exchange rates), deriving a TP of HKD110. Key risks include tighter wafer fabrication equipment restrictions, rising depreciation, slower capacity conversion, execution challenges at advanced nodes, and weaker-than-expected wafer demand or pricing. (ad/da)~ AASTOCKS Financial News Website: www.aastocks.com This article was automatically translated by AI, the Chinese 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. | |