[ET Net News Agency, 11 February 2021] Morgan Stanley lifted its target price for Hua
Hong Semiconductor (01347) to HK$59 from HK$35 on earnings change and maintained its
"overweight" rating.
The research house said its earnings change is mainly to reflect the more aggressive
capex plan for Wuxi fab, which Morgan revised up 12%/20% of 2021/22 capacity for Hua Hong.
It also revised up its ASP assumption by 4%/1% for 2021/22 to reflect better pricing power
during supply tightness.
Morgan noted that Wuxi fab utilization rate (UTR) reached 76%, up significantly from 56%
in 3Q 2020. It expects to see steep Wuxi production ramp up thanks to strong customer
demand. 12-inch wafers contributed 13% of total revenue in 4Q 2020, up from 7% in 3Q, and
Morgan believes they should reach 25-30% by 2021 due to an aggressive capacity expansion
plan backed by client orders. (KL)