[ET Net News Agency, 8 February 2021] HSBC Global Research lifted its target price for
SMIC (00981) to HK$19.7 from HK$13.6 and maintained its "reduce" rating.
The research house said SMIC's 4Q 2020 pre-tax profit of US$246m was a big beat versus
HSBC's estimate of US$26m, mainly due to other operating income of US$228m, of which
government subsidies constituted US$125m.
SMIC's 1Q 2021 sales guidance of 7-9% QoQ was also better than HSBC's estimates of -9%
but gross margin guidance of 17-19% was broadly in line. SMIC management acknowledged
ongoing uncertainty over the US technology ban as FY2021 capex guidance of US$4.3bn was
significantly lower than competitors like UMC and Vanguard.
HSBC expects SMIC will likely continue to underperform other mature legacy foundry peers
in FY2021. (KL)