Goldman Sachs raises the target price of Hua Hong Semiconductor to 134 yuan, reiterating a "Buy" rating

Goldman Sachs published a research report, believing that Hua Hong Semiconductor (01347.HK) will continue to be on an upward trend. The main supporting factors include customer preference for local foundries, the increase in market share of fabless companies in the global supply chain, driving structural growth opportunities; improvement in the supply-demand relationship in the Chinese semiconductor industry; and the continuous expansion of capacity as the next factory moves towards the 28/22 nanometer process node, indicating a long-term upward trend in average selling prices.

In light of recent signs of price increase momentum, the firm has raised its earnings forecast for Hua Hong for 2027 to 2029 by 1%, mainly based on a more optimistic revenue outlook (expected to increase by 1% to 2% for 2027 to 2029). Goldman Sachs expects revenue growth to be stronger, as demand for specialty technology chips (such as power management ICs and image sensors) will also benefit from the growth of AI servers and AI intelligent edge devices. With sustained high capacity utilization, the firm anticipates that Hua Hong will have more room to optimize its order structure, thereby achieving stronger revenue and profit performance.

As a leading foundry in China, Goldman Sachs expects Hua Hong to directly benefit from the demand recovery trend, with its solid gross margin improvement and capacity utilization optimization showing stronger earnings per share growth potential. The firm reiterated its "Buy" rating on Hua Hong Semiconductor and raised the target price from 117 yuan to 134 yuan