China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Q2'23 Foundry Flounders As Inventory Stubbornly Lingers

HHGrace. Yikes! Things Just Got Really Ugly

[Hua Hong (1347 HK) Target Price Change]: High IGBT Inventory Signals Pause in Top-Line Growth

[Hua Hong (1347 HK) Earnings Review]: Capacity Ramp and High LIBOR Impact Profitability

China/Asia TMT

Shawn Yang

Equity Bottom-Up

Hua Hong Semiconductor / Equity Bottom-Up

<ul>
<li>We expect Hua Hong to report C1Q23 top-line and non-IFRS net income in-line and (24%) vs. cons., respectively, missing mainly due to one-time costs. </li>
<li>Hua Hong’s post-A share IPO valuation is cheap at 0.7x P/B, but we expect that weakening industrials demand and a slow recovery to hamper shipments.</li>
<li>We maintain BUY but cut Hua Hong’s TP to HK$ 34 reflecting lowered wafer shipments estimates for FY24/25. Our TP implies 15x FY24 PE.</li>
</ul>


We expect Hua Hong to report C1Q23 top-line and non-IFRS net income in-line and (24%) vs. cons., respectively, missing mainly due to one-time costs. 
Hua Hong’s post-A share IPO valuation is cheap at 0.7x P/B, but we expect that weakening industrials demand and a slow recovery to hamper shipments.
We maintain BUY but cut Hua Hong’s TP to HK$ 34 reflecting lowered wafer shipments estimates for FY24/25. Our TP implies 15x FY24 PE.


[Hua Hong (1347 HK, BUY, TP HK$34) TP Change]: Valuation Is Attractive Post-Shanghai Listing