Citi Research raised its target price for SMIC (00981) to HK$8.8 from HK$6.5 and maintained its "sell" rating.
The research house said SMIC's 3Q GPM of 20.8%, versus 19.1% in 2Q, was better than Citi's forecast and market consensus of 20% on the higher utilization and better mix. The operating level turned profitable thanks mainly to government funding and other operating income.
Revenue was guided to increase by 2% to 4% with a GPM target of 23%-25%. Citi revised its 4Q revenue/earnings forecast to US$834m/US$57m.
SMIC continues to engage with customers to expand 14nm portfolio like RF. Citi believes that 14nm is the key swing factor to drive SMIC to return to strong revenue growth in 2020. Citi forecast 14nm revenue to ramp to 14% of total revenue in 2020.
14/11/2019 17:36
{I-bank focus}Citi raises SMIC (00981) to HK$8.8; "sell"
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