Hua Hong Semiconductor Ltd. (1347) AI Stock Analysis

• Market Cap: HK$70.09B
• Dividend Yield: 0.47%
• Average Volume (3M): 30.85M
• Price to Earnings (P/E): 297.4
• Beta (1Y): 1.59
• Revenue Growth: -2.06%
• EPS Growth: -83.44%
• Country: HK
• Employees: 7,487
• Sector: Technology
• Sector Strength: 88
• Industry: Semiconductors
• EPS (TTM): 0.02
• Shares Outstanding: 1,319,329,600
• 10 Day Avg. Volume: 36,822,399
• 30 Day Avg. Volume: 30,851,813
• PEG Ratio: 0.13
• Price to Book (P/B): 1.50
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -18.53
• Enterprise Value/Market Cap: 0.06
• Enterprise Value/Revenue: 0.70
• Enterprise Value/Gross Profit: 56.03
• Enterprise Value/Ebitda: 2.85
• 1Y Price Target: HK$32.45
• Price Target Upside: -7.68% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 5

• Rating: 61 Neutral
• Price Target: HK$38.00 ▲(8.11%Upside)

The stock's overall score is driven by strong balance sheet fundamentals, but is significantly impacted by poor profitability and cash flow trends. Positive momentum is observed in technical indicators, though valuation metrics point to overvaluation concerns.

Positive Factors

Domestic Demand

Hua Hong Semiconductor is expected to benefit from increased domestic demand for chip fabrication due to accelerated semiconductor localization amid ongoing geopolitical tensions.

Semiconductor Localization

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

Negative Factors

Competition and Market Demand

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.

Profit Margins

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 Ltd. (1347) is a leading pure-play foundry company based in China, specializing in the manufacture of semiconductors. The company primarily provides foundry services for embedded non-volatile memory, power discrete, and other specialty technologies. Serving a global clientele, Hua Hong focuses on high-quality manufacturing processes to enable the production of a wide range of semiconductor products, which are essential for various applications in consumer electronics, communications, computing, and industrial sectors.

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

The company demonstrates a solid balance sheet with increasing stockholders' equity and manageable debt levels. However, declining revenue, shrinking profit margins, and negative cash flow trends indicate financial challenges.

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	519.15M	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: 35.15
• 50DMA: Positive
• 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 35.15 is above the 20-day moving average (MA) of 33.12, above the 50-day MA of 32.69, and above the 200-day MA of 27.53, indicating a bullish trend. The MACD of 0.92 indicates Negative momentum. The RSI at 62.24 is Neutral, neither overbought nor oversold. The STOCH value of 57.39 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
1385	77 Outperform	$36.19B	39.10	9.53%	0.39%	-2.25%	-22.43%
2878	70 Outperform	€1.12B	14.24	7.58%	―	-26.17%	-48.28%
0085	69 Neutral	HK$2.84B	4.84	25.76%	7.45%	-22.20%	-14.43%
0085	69 Neutral	HK$2.84B	4.84	25.76%	7.45%	-22.20%	-14.43%
1347	61 Neutral	HK$70.09B	297.38	0.42%	0.47%	-2.06%	-83.44%
0522	58 Neutral	$24.14B	69.61	2.23%	2.38%	-9.99%	-51.96%
Sector *	56 Neutral	HK$13.71B	5.07	-5.77%	5.42%	9.48%	-42.73%
8490	43 Neutral	HK$91.01M	68.18	-21.90%	―	-8.34%	-8828.57%
8490	43 Neutral	HK$91.01M	68.18	-21.90%	―	-8.34%	-8828.57%

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.