Goldman Sachs: Lower Huahong Semiconductor's target price by 1%, rating downgraded to 'Neutral'

On February 17, the Golden Ten Data reported that Goldman Sachs’ report pointed out that considering the performance of SMIC (01347.HK) in 2024, its earnings forecast for the next two years was reduced by 1% per share, and the earnings forecast for 2027-2029 was reduced by 3% per share. The bank stated that the main reason was the pricing pressure and the increase in depreciation and amortization affecting the group’s profits. The report also indicated that Goldman Sachs simultaneously lowered the group’s revenue forecasts for 2025-2029 by 5%-0%, lowered the gross profit margin forecast by 2 percentage points to 0 percentage points, and adjusted the operating profit forecast by 11%-33%. The change in net income is slightly lighter than that in operating profit, as the bank takes into account the increased impact of minority shareholders’ equity and the losses of the new wafer fab will be shared by other shareholders of the joint venture. With the profit update, Goldman Sachs slightly lowered SMIC’s target price by 1%, from 31.3 Hong Kong dollars to 31 Hong Kong dollars. As the relative new target price of the group is relatively moderate, the rating was downgraded from “buy” to “neutral”.