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BOCI Raises HUA HONG SEMI (01347.HK) TP to HKD152.4, 1Q26 Results Tepid but Remains Positive on Domestic AI Computing Supply Chain
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BOCI issued a report stating that HUA HONG SEMI (01347.HK) delivered tepid results for 1Q26. Driven by a YoY increase of 18% in wafer shipments and a YoY rise of 4% in average selling price, revenue slightly exceeded expectations. However, as price hike measures will only take effect in subsequent quarters, gross margin remained flat QoQ at 13%. Management expects revenue for 2Q26 to reach between USD690 million and USD700 million, with the midpoint representing a QoQ growth of 5%, while gross margin is projected to expand to 14%16%. Supported by strong demand for AI and storage products, full-year average selling price is expected to increase by 10%15%. The report noted that domestic GPU and AI computing supply chain stocks generally declined, mainly due to market concerns that potential progress in China-US talks could benefit sales of NVIDIA H200 and other AI chips in China, thereby impacting demand for domestic AI chips. According to Reuters, the US has approved sales of H200 to ten Chinese companies, including Alibaba, ByteDance, TENCENT, JD.com and Lenovo. Currently, the key bottleneck for large-scale deployment of H200 lies in import approvals, which remain stringent to support the development of domestic AI computing capabilities. Therefore, progress on AI chip sales in China between the two sides is expected to take time. Fostering domestic AI computing capacity remains a policy priority, and the bank continues to stay positive on the domestic AI computing supply chain. Based on robust demand for AI infrastructure and the positive outlook brought by price increases across the industry chain, BOCI raised its target price-to-book multiple for HUA HONG SEMI from 4x to 5x, lifting the TP from HKD116.5 to HKD152.4, and maintained a Buy rating. (ha/da) Auto-translated by AI This article was automatically translated by AI, the original language version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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