Hua Hong Semiconductor Ltd. (1347) AI Stock Analysis

• Market Cap: HK$63.26B
• Dividend Yield: 0.52%
• Average Volume (3M): 22.32M
• Price to Earnings (P/E): 268.2
• Beta (1Y): 1.62
• Revenue Growth: -2.06%
• EPS Growth: -83.44%
• Country: HK
• Employees: 7,487
• Sector: Technology
• Sector Strength: 84
• Industry: Semiconductors
• EPS (TTM): 0.02
• Shares Outstanding: 1,318,461,700
• 10 Day Avg. Volume: 23,483,731
• 30 Day Avg. Volume: 22,324,971
• PEG Ratio: -2.40
• Price to Book (P/B): 1.15
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -3.88
• Enterprise Value/Market Cap: 0.11
• Enterprise Value/Revenue: 1.06
• Enterprise Value/Gross Profit: 85.03
• Enterprise Value/Ebitda: 4.32
• 1Y Price Target: HK$33.76
• Price Target Upside: 6.50% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 6

• Rating: 56 Neutral
• Price Target: HK$33.00 ▲(4.10%Upside)

The overall score is primarily impacted by the company's strong balance sheet, which provides some financial stability. However, this is overshadowed by significant concerns including high valuation, declining profitability, and negative cash flow trends. Technical analysis presents a neutral outlook without strong momentum indicators.

Positive Factors

Capacity Expansion

Robust capacity expansion, such as the addition of a new 12-inch plant, is expected to double the company’s 12-inch capacity in 2025, driving future growth.

Domestic Demand

Hua Hong is anticipated to be a key beneficiary of increased domestic demand for chip fabrication, driven by ongoing geopolitical risks and policy uncertainties.

Geopolitical Impact

Hua Hong is expected to benefit from accelerated semiconductor localization amid rising geopolitical uncertainties, which could drive sector revaluation.

Negative Factors

Competition

Potential risks for Hua Hong include intensified competition in mature nodes from both global and domestic peers, as well as weak end-market demand.

Economic Uncertainty

Economic uncertainty is expected to continue, leading to persistent ASP pressure on mature-node foundries.

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.

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 foundry services, where it manufactures semiconductor wafers for its customers based on their proprietary designs. As a pure-play foundry, the company does not produce its own branded products but instead focuses on providing customized manufacturing solutions for semiconductor companies. Key revenue streams include wafer fabrication services and technological solutions tailored to the needs of its diverse client base. Significant partnerships with design companies and technology firms often contribute to its earnings, as Hua Hong collaborates closely with these partners to stay at the forefront of semiconductor manufacturing technology advancements.

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
	EBIT
-123.96M	220.50M	536.40M	309.62M	49.05M
	EBITDA
519.15M	774.51M	993.26M	627.56M	255.40M
	Net Income Common Stockholders
58.11M	280.03M	449.91M	261.48M	33.31M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
4.46B	5.59B	2.01B	1.61B	922.79M
	Total Assets
12.42B	10.94B	7.06B	6.20B	4.57B
	Total Debt
2.22B	2.12B	1.93B	1.61B	587.82M
	Net Debt
-2.24B	-3.46B	-81.08M	-2.02M	-334.97M
	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: 31.70
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• 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 31.7 is above the 20-day moving average (MA) of 31.23, below the 50-day MA of 32.57, and above the 200-day MA of 25.91, indicating a neutral trend. The MACD of -0.39 indicates Negative momentum. The RSI at 52.36 is Neutral, neither overbought nor oversold. The STOCH value of 65.66 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 *	62 Neutral	$11.80B	10.31	-7.45%	2.91%	7.43%	-7.78%
1347	56 Neutral	HK$63.26B	268.19	0.42%	0.52%	-2.06%	-83.44%
IDCBF		$331.44B	5.52		8.33%	―	―
SFDMF		$4.74B	25.11	9.53%	0.61%	―	―
SNPTF		$8.65B	22.33	11.45%	0.36%	―	―
1345	70 Outperform	HK$2.53B	14.94	14.36%	3.41%	-4.04%	2.92%
1415	66 Neutral	HK$20.01B	21.54	25.73%	―	168.87%	150.80%

Hua Hong Semiconductor Ltd. Corporate Events

Hua Hong Semiconductor Successfully Passes AGM Resolutions

Hua Hong Semiconductor Ltd. announced that all resolutions proposed during their annual general meeting on May 8, 2025, were successfully passed by shareholders. This includes the re-election of directors and amendments to the Articles of Association, which may impact the company’s governance and operational strategies.

Hua Hong Semiconductor Reports Steady Growth Amid Industry Uncertainties

Hua Hong Semiconductor reported a revenue of $540.9 million for the first quarter of 2025, marking a 17.6% increase from the previous year. Despite a decline in net profit compared to the same quarter last year, the company has maintained steady growth and optimized its product portfolio. The company faces uncertainties due to global environmental changes and policies but plans to expand capacity, enhance R&D, and explore marketing opportunities to mitigate risks and improve performance.

Hua Hong Semiconductor Schedules Board Meeting to Review Q1 Financials

Hua Hong Semiconductor Ltd. has announced a board meeting scheduled for May 8, 2025, to discuss and approve the company’s unaudited financial results for the first quarter of 2025. This meeting is significant as it will provide insights into the company’s financial health and operational performance, potentially impacting investor confidence and market positioning.

Hua Hong Semiconductor Announces Annual General Meeting and Key Resolutions

Hua Hong Semiconductor Ltd. has announced its upcoming annual general meeting scheduled for May 8, 2025, in Hong Kong. The meeting will address several resolutions, including the adoption of financial statements, approval of a profit distribution plan, re-election of directors, and the reappointment of auditors. Additionally, the company seeks approval for share repurchase and issuance mandates, which could impact its market operations and shareholder value.

Hua Hong Semiconductor Proposes Amendments to Articles of Association

Hua Hong Semiconductor Ltd. has announced proposed amendments to its Articles of Association, aligning with upcoming changes in legal and regulatory requirements concerning treasury shares and shareholder communication. These amendments, subject to shareholder approval at the annual general meeting in May 2025, reflect the company’s efforts to stay compliant with the latest Companies Ordinance and Listing Rules.

Hua Hong Semiconductor Announces 2024 Annual Results

Hua Hong Semiconductor Ltd. has announced its audited annual results for the year ended December 31, 2024. The full text of the 2024 Annual Report will be available to shareholders and on relevant websites, indicating compliance with the Hong Kong Stock Exchange’s listing requirements. This announcement reflects the company’s commitment to transparency and regulatory adherence, potentially impacting stakeholders by providing insights into the company’s financial health and strategic direction.

Hua Hong Semiconductor Schedules Board Meeting for Key Financial Decisions

Hua Hong Semiconductor Ltd. has announced a board meeting scheduled for March 27, 2025, to discuss several key items, including the approval of the company’s audited consolidated results for the year ending December 31, 2024, potential dividend payments, and the planning of the annual general meeting. This meeting is significant for stakeholders as it will address the company’s financial performance and strategic decisions impacting its market positioning.