CMB International: Maintains Huahong Semiconductor(01347) "Hold" rating; target price raised to HKD 80

CITIC Securities APP learned that China Merchants Securities issued a research report stating that they maintain a “Hold” rating for Hua Hong Semiconductor (01347), with a target price raised from HKD 68 to HKD 80. The company’s product portfolio and scale continue to improve, but the valuation is considered high. Hua Hong announced its Q4 and full-year 2025 results, driven by high capacity utilization and strong shipment volumes, with Q4 revenue increasing by 22.4% year-over-year and 3.9% quarter-over-quarter to $660 million, reaching a quarterly high. Q4 gross margin was 13%, below Q3’s 13.5%, but in line with management guidance.

The report states that the company’s net profit for Q4 was $17 million, down 53.4% quarter-over-quarter, mainly due to rising labor costs. Full-year 2025 revenue grew 20% year-over-year to $2.4 billion, in line with the bank’s and market consensus; full-year gross margin was 11.8%, also in line with expectations, partially offset by higher depreciation expenses. Looking ahead, management guides Q1 2026 revenue between $650 million and $660 million, with gross margins between 13% and 15%. The bank believes the company performed well in maintaining high capacity utilization and accelerating its 12-inch product portfolio in 2025, but currently, the valuation appears high.