[ET Net News Agency, 16 November 2018] Morgan Stanley lowered its target price for SMIC
(00981) to HK$5.8 from HK$7.5 and maintained its "underweight" rating.
The research house said, during SMIC's 3Q earnings call, management said that was an
overcapacity issue in 28nm, and provided a weak 4Q revenue outlook. Morgan believes this
confirms its view that 2nd-tier foundries are likely to be the key sufferers amid a
semiconductor downcycle, as industry orders likely continue to consolidate towards TSMC.
Morgan estimated that SMIC has around 30% revenue exposure to smartphones semis. Weak
domestic consumer demand in China and a slowdown in automotive and industrial demand is
now combining with a worsening smartphone semis outlook. This is likely to raise further
challenges for SMIC in terms of utilization rates and operations.
It raised its 2018 EPS forecast marginally, to reflect a better-than-expected
non-operating contribution, but cut its 2019 and 2020 EPS forecasts by 2% and 10%. (KL)
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00981 SMIC
Nominal 
15.540 +0.440 (+2.914%) Others
16/11/2018 16:52
[I-bank focus]Morgan cuts SMIC (00981) to HK$5.8
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