[ET Net News Agency, 12 February 2018] BofA Merrill Lynch cut its target price for SMIC
(00981) to HK$9 from HK$10.5, and reiterated its "underperform" rating.
The research house said SMIC's 4Q net profit of US$48m is ahead of BofAML's estimate,
while gross margin of 19% is also inline. For 1Q 2018, management guides revenue to
increase by 7-9% QoQ including a US$150m one-off technology licensing revenue.
SMIC suggests that it has made good progress in its 28nm HKC/HKC+ products and the
evelopment of 14nm FinFET since the Co-CEO Dr. Liang came on board four months ago. It
also suggested that 14nm will enter risk production in 1H 2019 and volume production by
late 2019, about six months ahead of original schedule.
That said, BofAML thinks earnings in 2018-19 will likely be under pressure as SMIC
builds up its technology. Hence, it adjusted our earnings estimate for 2018/19 to reflect
softer guidance/outlook. (KL)
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00981 SMIC
Nominal 
16.260 +0.060 (+0.370%) Others
12/02/2018 17:38
[I-bank focus]BofAML cuts SMIC (00981) to HK$9
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