In today’s briefing:
- [SMIC (981 HK, BUY, TP HK$24) Target Price Change]: Still Waiting for Downstream Inventory Digestion
- SHEN: One-Time Benefits Offset Loss
[SMIC (981 HK, BUY, TP HK$24) Target Price Change]: Still Waiting for Downstream Inventory Digestion
- We expect SMIC to report C1Q23 top-line, IFRS operating income, and non-IFRS net income (2.6%), (31%), and (29%) vs. consensus, respectively.
- Our sample of 1Q23 earnings for A-listed fabless firms found that (1) inventory days grew 18% QoQ to 191 days, and (2) revenues declined 9% QoQ.
- Despite potential earnings miss, SMIC’s BUY case is strengthened positive externalities. We maintain BUY and raise TP to HK$24.
SHEN: One-Time Benefits Offset Loss
- SHEN reported first quarter results benefiting from non-recurring termination revenue and tax refunds. SHEN’s revenue and profitability were aided in the quarter with $1.7 million in termination fee
- Net income benefited from a one-time refund on sales tax and interest earned on tax refunds more than offsetting SHEN’s interest expense
- SHEN ended the first quarter with 28,793 Glo Fiber subscribers, up 4,507 from the fourth quarter 2022
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