In "The Big Banks," CICC maintains SMIC's "outperform industry" rating, with fourth-quarter performance in line with expectations

CICC published a report stating that SMIC (00981.HK) achieved performance in the fourth quarter of last year that met the bank's expectations. The revenue for H shares was USD 2.489 billion, a quarterly increase of 4.5%, with a gross margin of 19.2%, down 2.8 percentage points quarter-on-quarter, mainly due to depreciation, which was in line with the bank's expectations. The revenue for the full year 2025 is projected to be USD 9.327 billion, an annual increase of 16.2%, with a gross margin of 21%, up 3 percentage points year-on-year. The company guidance indicates that revenue in the first quarter of this year will remain flat quarter-on-quarter, with a not-so-weak off-season, and a gross margin of 18-20%, all in line with the bank's expectations; it is expected that the revenue growth guidance for 2026 will exceed the average of comparable peers.

The report indicates that considering the price increase of storage chips in 2026 leading to higher prices for end products and customers' willingness to stock up, the demand for related chips may face some pressure. Taking into account the pressure on consumer electronics demand, the revenue/profit estimates for H shares in 2026 have been revised down by 3%/7% to USD 11.78 billion/920 million; the revenue/profit for 2027 has been introduced for the first time at USD 13.46 billion/1.1 billion. The "Outperform Industry" rating is maintained, considering the company's stable leading position in wafer manufacturing, with a target price of RMB 150 for SMIC (688981.SH) A shares and HKD 100 for H shares