<Research>CLSA Anticipates Limited Impact of US Tariffs on SMIC/ HUA HONG SEMI w/ Both Rated at Outperform
US Market Impact on SMIC and HUA HONG SEMI: In 2024, the US market represented 13% of SMIC's total revenue and 10% of HUA HONG SEMI's revenue, suggesting that the impact of US tariffs on these companies may be limited.
Positive Outlook for Domestic Semiconductor Promotion: CLSA's research indicates that China's promotion of domestic semiconductors could benefit both SMIC and HUA HONG SEMI, with target prices set at $59.2 and $36.9 respectively, both rated as Outperform.
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<Daily Summary> HSI Falls 292 Points; HSTI Declines 156 Points; BABA Drops More Than 4%; XIAOMI Decreases Over 3%; HENDERSON LAND, MIDEA GROUP, CNOOC, HANG LUNG PPT, SHK PPT Reach New Peaks; Market Activity Increases
Market Performance: The Hang Seng Index (HSI) fell by 292 points (1.1%) to close at 26,413, while the Hang Seng Tech Index (HSTI) dropped 156 points (2.9%) to 5,211, with a total market turnover of $165.37 billion.
Declining Heavyweights: Major stocks like Alibaba, Xiaomi, Tencent, and Meituan experienced significant declines, with Alibaba down 4.9% and Xiaomi down 3.5%, reflecting a broader trend of short selling in the market.
Notable Movers: JD Health and Baidu saw substantial drops of 6.3%, while Beigene and PetroChina gained 4.2% and 3.7%, respectively, indicating mixed performance among HSI and HSCEI constituents.
High Performers in Smaller Stocks: Stocks like DOBOT and GUOFUHEE surged by over 17%, showcasing strong gains in smaller companies despite the overall market downturn.
HSI Drops 161 Points at Midday in Year of the Horse; Robotics and AI Stocks Surge; PetroChina and CNOOC Reach All-Time Highs
Market Performance: The HSI fell by 161 points (0.6%) to 26,544, while the HSCEI and HSTECH also experienced declines, with total market turnover reaching HKD91.755 billion.
Oil and Energy Stocks Surge: PETROCHINA and CNOOC saw significant gains of 4.6% and 3.3%, respectively, with CNOOC hitting an all-time high, while other energy-related stocks also performed well.
Robotics and AI Stocks Rally: Following a viral performance at the CCTV Spring Festival Gala, robotics stocks like DOBOT and ROBOSENSE surged by over 19%, alongside strong performances from AI model stocks.
Tech Sector Declines: Major tech companies such as Alibaba, Baidu, and Tencent faced losses, with declines ranging from 1.4% to 7.8%, while several other tech stocks also experienced significant drops.
DBS Lowers SMIC (00981.HK) Price Target to $87.4, Maintains Buy Rating Due to Re-rating Opportunities
Company Overview: SMIC, China's leading 7nm-class wafer foundry, is noted for its extensive 12-inch footprint and advanced local logic process capabilities, positioning it well for the shift towards local design and domestic manufacturing.
Analyst Ratings: DBS Group Research maintains a Buy rating for SMIC, adjusting its target price from $88.8 to $87.4 while also lowering its earnings forecasts for 2026 and 2027 by 10% and 12% respectively due to short-term profit margin pressures.
HSI Declines by 48 Points as BABA-W and BIDU-SW Fall; COSCO SHIP ENGY Rises Over 6%
Market Opening: The Hong Kong equity market opened lower after the Lunar New Year holiday, with the HSI down 0.2% at 26,657, the HSCEI down 0.2% at 9,052, and the HSTECH down 0.7% at 5,330.
Stock Performances: CNOOC and COSCO SHIP ENGY saw gains of 2.2% and 6.1% respectively, while tech stocks like BABA-W and BIDU-SW experienced declines of 3.7% and 5.2%.
Sector Movements: Commodities stocks generally rose, with notable increases from MMG and CMOC, while several automakers and financial stocks showed mixed results, with HSBC and HKEX slightly up.
Short Selling Trends: Significant short selling was observed across various sectors, particularly in tech stocks, with BILIBILI-W and KINGDEE INT'L experiencing notable declines alongside high short selling ratios.
CICC Reaffirms Outperform Rating for SMIC (00981.HK); 4Q25 Results Meet Expectations
SMIC 4Q25 Results: SMIC reported H-share revenue of USD2.489 billion for 4Q25, a 4.5% increase QoQ, with a gross margin of 19.2%, down from the previous quarter, aligning with broker forecasts.
2025 Full-Year Performance: The company's full-year revenue for 2025 reached USD9.327 billion, a 16.2% YoY increase, with a gross margin of 21%, up 3 percentage points YoY.
1Q26 Guidance: SMIC anticipates flat revenue QoQ for 1Q26, with a gross margin expected between 18-20%, consistent with broker estimates, and projected revenue growth for 2026 to surpass peers.
Broker Ratings: M Stanley maintained an Overweight rating for SMIC, citing its strong position in wafer manufacturing, with target prices set at RMB150 for A-shares and HKD100 for H-shares.
Citi Increases Price Targets for SMIC and HUA HONG SEMI to HKD 75 and HKD 115
Financial Results Overview: SMIC and HUA HONG SEMI's 4Q25 financial results were in line with company guidance, but the 1Q26 outlook was slightly below expectations.
Market Performance: SMIC's stock rose by 0.501% and HUA HONG SEMI's by 0.854%, with significant short selling activity reported for both companies.
Growth Prospects: Both companies expect growth driven by localization demand for semiconductors in China and AI opportunities, despite challenges from increased depreciation and competition affecting profit margins.
Target Price Adjustments: Citi raised SMIC's target price from HKD53 to HKD75 (Neutral rating) and HUA HONG SEMI's from HKD105 to HKD115 (Buy rating).
<Daily Summary> HSI Falls 292 Points; HSTI Declines 156 Points; BABA Drops More Than 4%; XIAOMI Decreases Over 3%; HENDERSON LAND, MIDEA GROUP, CNOOC, HANG LUNG PPT, SHK PPT Reach New Peaks; Market Activity Increases
Market Performance: The Hang Seng Index (HSI) fell by 292 points (1.1%) to close at 26,413, while the Hang Seng Tech Index (HSTI) dropped 156 points (2.9%) to 5,211, with a total market turnover of $165.37 billion.
Declining Heavyweights: Major stocks like Alibaba, Xiaomi, Tencent, and Meituan experienced significant declines, with Alibaba down 4.9% and Xiaomi down 3.5%, reflecting a broader trend of short selling in the market.
Notable Movers: JD Health and Baidu saw substantial drops of 6.3%, while Beigene and PetroChina gained 4.2% and 3.7%, respectively, indicating mixed performance among HSI and HSCEI constituents.
High Performers in Smaller Stocks: Stocks like DOBOT and GUOFUHEE surged by over 17%, showcasing strong gains in smaller companies despite the overall market downturn.
HSI Drops 161 Points at Midday in Year of the Horse; Robotics and AI Stocks Surge; PetroChina and CNOOC Reach All-Time Highs
Market Performance: The HSI fell by 161 points (0.6%) to 26,544, while the HSCEI and HSTECH also experienced declines, with total market turnover reaching HKD91.755 billion.
Oil and Energy Stocks Surge: PETROCHINA and CNOOC saw significant gains of 4.6% and 3.3%, respectively, with CNOOC hitting an all-time high, while other energy-related stocks also performed well.
Robotics and AI Stocks Rally: Following a viral performance at the CCTV Spring Festival Gala, robotics stocks like DOBOT and ROBOSENSE surged by over 19%, alongside strong performances from AI model stocks.
Tech Sector Declines: Major tech companies such as Alibaba, Baidu, and Tencent faced losses, with declines ranging from 1.4% to 7.8%, while several other tech stocks also experienced significant drops.
DBS Lowers SMIC (00981.HK) Price Target to $87.4, Maintains Buy Rating Due to Re-rating Opportunities
Company Overview: SMIC, China's leading 7nm-class wafer foundry, is noted for its extensive 12-inch footprint and advanced local logic process capabilities, positioning it well for the shift towards local design and domestic manufacturing.
Analyst Ratings: DBS Group Research maintains a Buy rating for SMIC, adjusting its target price from $88.8 to $87.4 while also lowering its earnings forecasts for 2026 and 2027 by 10% and 12% respectively due to short-term profit margin pressures.
HSI Declines by 48 Points as BABA-W and BIDU-SW Fall; COSCO SHIP ENGY Rises Over 6%
Market Opening: The Hong Kong equity market opened lower after the Lunar New Year holiday, with the HSI down 0.2% at 26,657, the HSCEI down 0.2% at 9,052, and the HSTECH down 0.7% at 5,330.
Stock Performances: CNOOC and COSCO SHIP ENGY saw gains of 2.2% and 6.1% respectively, while tech stocks like BABA-W and BIDU-SW experienced declines of 3.7% and 5.2%.
Sector Movements: Commodities stocks generally rose, with notable increases from MMG and CMOC, while several automakers and financial stocks showed mixed results, with HSBC and HKEX slightly up.
Short Selling Trends: Significant short selling was observed across various sectors, particularly in tech stocks, with BILIBILI-W and KINGDEE INT'L experiencing notable declines alongside high short selling ratios.
CICC Reaffirms Outperform Rating for SMIC (00981.HK); 4Q25 Results Meet Expectations
SMIC 4Q25 Results: SMIC reported H-share revenue of USD2.489 billion for 4Q25, a 4.5% increase QoQ, with a gross margin of 19.2%, down from the previous quarter, aligning with broker forecasts.
2025 Full-Year Performance: The company's full-year revenue for 2025 reached USD9.327 billion, a 16.2% YoY increase, with a gross margin of 21%, up 3 percentage points YoY.
1Q26 Guidance: SMIC anticipates flat revenue QoQ for 1Q26, with a gross margin expected between 18-20%, consistent with broker estimates, and projected revenue growth for 2026 to surpass peers.
Broker Ratings: M Stanley maintained an Overweight rating for SMIC, citing its strong position in wafer manufacturing, with target prices set at RMB150 for A-shares and HKD100 for H-shares.
Citi Increases Price Targets for SMIC and HUA HONG SEMI to HKD 75 and HKD 115
Financial Results Overview: SMIC and HUA HONG SEMI's 4Q25 financial results were in line with company guidance, but the 1Q26 outlook was slightly below expectations.
Market Performance: SMIC's stock rose by 0.501% and HUA HONG SEMI's by 0.854%, with significant short selling activity reported for both companies.
Growth Prospects: Both companies expect growth driven by localization demand for semiconductors in China and AI opportunities, despite challenges from increased depreciation and competition affecting profit margins.
Target Price Adjustments: Citi raised SMIC's target price from HKD53 to HKD75 (Neutral rating) and HUA HONG SEMI's from HKD105 to HKD115 (Buy rating).
