Analyst Jim Hin Kwong Au of DBS maintained a Buy rating on Hua Hong Semiconductor Ltd. (1347 – Research Report), with a price target of HK$27.00.
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Jim Hin Kwong Au’s rating is based on the expectation of a significant turnaround in Hua Hong Semiconductor’s financial performance. The company is projected to experience a robust recovery in their net profit, driven by a rebound in wafer average selling prices and an increase in the demand for 300mm wafers. This recovery is anticipated to result in a solid 71% earnings increase in FY25, following a decline in FY24, thereby making the stock an attractive buy.
Furthermore, Hua Hong is well-positioned to benefit from the accelerating trend of localization in China’s integrated circuit market. With plans for substantial capacity expansion, including a new 12-inch plant that will double their production capabilities, the company is poised to capitalize on the growing demand in consumer electronics and automotive sectors. The strategic focus on mature node foundries and the anticipated growth in automotive applications, especially in electric vehicles, further solidify the company’s growth prospects and justify the Buy rating.
In another report released on February 11, CLSA also upgraded the stock to a Buy with a HK$30.60 price target.