Foreign investors optimistic about SMIC: 14/12nm process smooth, localization to promote profit growth

As the largest and most advanced wafer foundry in China, SMIC SMIC’s progress has been a concern, with the company reporting Q3 quarterly results last week, with revenue of $816.5 million, up 4% year-on-year and down 3.2% from a year earlier. Net profit was $84.626 million, up 1014 percent from $7.591 million a year earlier.

Foreign investors optimistic about SMIC: 14/12nm process smooth localization to promote profit growth

SMIC’s net profit has jumped 10-fold, although this is mainly due to q3 disposal of overseas fabs, but from capacity utilization rates, china’s customers continue to improve, SMIC’s prospects for development are very good.

Based on this, overseas financial institutions have also issued positive results for SMIC, Goldman Sachs recently announced that SMIC’s future earnings forecast, 2020 and 2021 will be increased by 67%, 29% to $189 million, 252 million U.S. dollars, respectively, the direct reason is that SMIC’s future revenue will increase. Gross margins will also rise.

At the same time, Goldman Sachs also boosted SMIC’s revenues for 2019, 2020 and 2021 to $3,119 million, $3,672 million and $4.207 billion, up 2%, 1% and 1% from the previous year.

Goldman also raised SMIC’s target price to HK$12.8 from HK$11.5 and reiterated its “buy” rating.

Goldman Sachs is bullish on SMIC’s technical reasons, saying SMIC’s 14nm, 12nm and future N-1 FinFET processes are progressing steadily, with stronger growth next year and demand for mature process technologies expected to grow.

Goldman Sachs believes SMIC’s earnings will continue to grow between 2020 and 2021 as SMIC’s technology development and chip-in-house growth increase.

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