Key Takeaways:
CICC raised its target price on Hua Hong Semiconductor (01347.HK) by 33 percent to HKD146, maintaining its Outperform rating after the chipmaker’s first-quarter results met expectations on the back of a recovering semiconductor market.
The bank cited optimism over the “computing-power and power synergy trend and the sustainability of the memory upcycle” for the significant target price increase. The new target corresponds to a price-to-book ratio of 4.8 times the bank’s 2026 forecast.
In its report, CICC raised its 2026 revenue forecast for Hua Hong by 2 percent to $2.94 billion and its 2027 forecast by 3 percent to $3.31 billion. Profit forecasts saw a more substantial lift, with the 2026 estimate rising 14 percent to $156 million and the 2027 estimate increasing 32 percent to $218 million. The move follows a strong first quarter where Hua Hong’s capacity utilization reached 99.7 percent, with shipments hitting 1.45 million 8-inch equivalent wafers. Gross margin for the quarter was 13 percent, up 3.8 percentage points year-over-year.
The bullish call on Hua Hong reflects a broader positive sentiment for China’s foundries, which are benefiting from a global AI-driven boom and a memory supply crunch. BOCOM International also recently raised its target on the stock to HKD145, noting improved visibility for the company’s new Fab 9B and continued average selling price growth. Management at Hua Hong has indicated potential for a 10 to 15 percent price hike for NOR flash products this year.
The revised forecasts from CICC and other brokers suggest growing confidence in Hua Hong's ability to navigate market dynamics and expand capacity effectively. Investors will be watching the company’s second-quarter results and any updates on the construction of its new Jiangsu fab for signs of continued momentum.
This article is for informational purposes only and does not constitute investment advice.
