Hua Hong Semiconductor Ltd. (1347) AI Stock Analysis

• Market Cap: HK$95.84B
• Dividend Yield: 0.35%
• Average Volume (3M): 46.24M
• Price to Earnings (P/E): 367.1
• Beta (1Y): 1.61
• Revenue Growth: 10.97%
• EPS Growth: -67.51%
• Country: HK
• Employees: 7,487
• Sector: Technology
• Sector Strength: 87
• Industry: Semiconductors
• EPS (TTM): 0.04
• Shares Outstanding: 1,321,725,500
• 10 Day Avg. Volume: 63,560,383
• 30 Day Avg. Volume: 46,241,609
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: HK$44.58
• Price Target Upside: -6.19% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5

• Rating: 51 Neutral
• Price Target: HK$43.00 ▼(-9.51% Downside)

Hua Hong Semiconductor Ltd.'s overall score is primarily influenced by its strong balance sheet, but offset by declining financial performance and liquidity concerns due to negative cash flow trends. The stock appears overvalued with high P/E ratio and limited dividend yield. Technical indicators suggest a correction may be imminent due to overbought conditions.

Positive Factors

Capacity Expansion

Capacity expansion underwrites the next upcycle, as Phase II of the Wuxi 12-inch fab will double Hua Hong’s 12-inch capacity by 2025.

Revenue Growth

Management expects a further 19.7% year-over-year revenue growth in the third quarter, showing accelerated growth from the second quarter.

Semiconductor Localization

Analysts remain positive on Hua Hong's role in China's semiconductor localization theme, which could serve as a potential upside catalyst.

Negative Factors

Average Selling Price Pressure

Gross profit margin recovery is expected to be slower than anticipated due to ongoing average selling price pressure and increased depreciation costs from the ramp-up of new fabs.

Depreciation Costs

Despite a gross profit margin beat in the second quarter, ongoing depreciation expenses continue to weigh on margins.

Weak Consumer Demand

Prolonged sluggish end-market demand of consumer electronics is impacting the company negatively.

Hua Hong Semiconductor Ltd. Business Overview & Revenue Model

Company Description

Hua Hong Semiconductor Limited, an investment holding company, manufactures and sells semiconductor products. The company provides embedded non-volatile memory, standard logic and mixed-signal, radio frequency, power management integrated circuits, power discrete, and automotive solutions. It also offers foundry services; and design services comprising standard and customized IP development, full-custom layout design, and customer-specific integrated solutions, as well as design support and tape out services. In addition, the company provides multi-project wafer services; mask making services; and backend services, such as in-house testing, backside processing and dicing, and backend turnkey services, as well as wafer probing, assembly, and testing. Its products are used in consumer electronics, communications, computing, industrial, and automotive markets in the People's Republic of China, North America, Europe, Japan, and other Asian countries. The company was founded in 1997 and is headquartered in Shanghai, the People's Republic of China. Hua Hong Semiconductor Limited is a subsidiary of Shanghai Alliance Investment Ltd.

How the Company Makes Money

Hua Hong Semiconductor Ltd. generates revenue primarily through its semiconductor manufacturing services. The company operates on a foundry model, where it manufactures integrated circuits (ICs) on behalf of its clients, which include fabless semiconductor companies. Revenue streams include wafer fabrication services, where clients pay for the production of semiconductor wafers, and technology licensing, where Hua Hong licenses its proprietary technologies. Strategic partnerships and collaborations with technology firms and research institutions also contribute to its revenue, allowing the company to enhance its manufacturing capabilities and expand its customer base.

Hua Hong Semiconductor Ltd. Financial Statement Overview

Summary

Hua Hong Semiconductor Ltd. shows strength in its balance sheet with a stable equity base and manageable debt levels. However, income statement metrics indicate declining profitability, with shrinking margins and revenue. Cash flow analysis highlights potential liquidity challenges due to negative free cash flow trends. The company should focus on improving operational efficiency and revenue generation to enhance overall financial health.

Income Statement

The income statement shows a decline in total revenue from 2022 to 2024, with a significant drop in gross profit margin from 34.07% in 2022 to 10.24% in 2024. The net profit margin also decreased from 18.17% in 2022 to 2.90% in 2024. This suggests a challenging environment with decreasing profitability, although the company has maintained positive net income.

Balance Sheet

The balance sheet is strong with a consistent increase in stockholders' equity from 2021 to 2024. The debt-to-equity ratio is manageable, showing prudent financial leverage. The equity ratio has improved, indicating a solid capital structure with 50.32% equity in total assets for 2024, enhancing financial stability.

Cash Flow

Cash flow analysis reveals a negative free cash flow trend, with free cash flow worsening from -245 million in 2022 to -2.3 billion in 2024. This is concerning given the substantial capital expenditures. The operating cash flow has declined, which may affect liquidity if this trend continues.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.00B	2.29B	2.48B	1.63B	961.28M
Gross Profit	205.13M	487.10M	843.66M	451.60M	234.79M
EBITDA	385.01M	774.51M	993.26M	627.56M	255.40M
Net Income	58.11M	280.03M	449.91M	261.48M	99.44M
Balance Sheet
Total Assets	12.42B	10.94B	7.06B	6.20B	4.57B
Cash, Cash Equivalents and Short-Term Investments	4.46B	5.59B	2.01B	1.61B	922.79M
Total Debt	2.22B	2.12B	1.93B	1.61B	587.82M
Total Liabilities	3.51B	2.93B	2.92B	2.52B	1.21B
Stockholders Equity	6.25B	6.30B	3.03B	2.87B	2.53B
Cash Flow
Free Cash Flow	-2.32B	-264.91M	-245.32M	-420.44M	-818.15M
Operating Cash Flow	459.50M	641.70M	750.87M	518.47M	269.11M
Investing Cash Flow	-2.67B	-833.31M	-930.16M	-863.06M	-405.66M
Financing Cash Flow	1.15B	3.78B	672.18M	1.01B	540.43M

Hua Hong Semiconductor Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 47.52
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:1347, the sentiment is Positive. The current price of 47.52 is above the 20-day moving average (MA) of 45.18, above the 50-day MA of 38.91, and above the 200-day MA of 30.96, indicating a bullish trend. The MACD of 3.46 indicates Negative momentum. The RSI at 74.64 is Negative, neither overbought nor oversold. The STOCH value of 73.07 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HK:1347.

Hua Hong Semiconductor Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	68 Neutral	¥243.52B	15.34	6.64%	2.42%	9.16%	-0.15%
1347	51 Neutral	HK$95.84B	367.09	0.45%	0.35%	10.97%	-67.51%
ASMVF	―	$3.55B	112.57	1.55%	0.59%	―	―
SFDMF	―	$4.97B	25.11	9.53%	―	―	―
RZF	―	€133.18M	17.08	4.98%	―	―	―
0085	65 Neutral	HK$3.65B	6.22	25.76%	5.17%	-22.20%	-14.43%
8490	47 Neutral	HK$92.42M	68.18	-21.90%	―	-8.34%	-8828.57%

Hua Hong Semiconductor Ltd. Corporate Events

Hua Hong Semiconductor Announces Trading Halt Amid Potential Acquisition

Hua Hong Semiconductor Ltd. announced a trading halt of its RMB shares on the Shanghai Stock Exchange’s STAR Board due to a potential acquisition of equity interests in Shanghai Huali Microelectronics Corporation. The trading halt, effective from August 18, 2025, is expected to last no more than 10 trading days, pending further announcements. The transaction is subject to various approvals and carries uncertainty regarding its implementation, urging investors to remain cautious.

Hua Hong Semiconductor Reports Strong Q2 2025 Results Amidst Market Fluctuations

Hua Hong Semiconductor Limited reported its second quarter 2025 results, showing a revenue increase of 18.3% year-over-year to US$566.1 million and a net profit rise of 19.2% over the same period. The company achieved record capacity utilization and improved operational metrics amidst global trade fluctuations, while continuing to expand its product portfolio and ramp up its new 12-inch production line in Wuxi.

Hua Hong Semiconductor Schedules Board Meeting for Q2 Financial Review

Hua Hong Semiconductor Ltd. has announced a board meeting scheduled for August 7, 2025, to review and approve the company’s unaudited financial results for the second quarter of 2025. This meeting is significant as it will provide insights into the company’s financial health and operational performance, potentially impacting its market positioning and stakeholder confidence.