【True Wisdom Hong Kong Stock Experts】SMIC (00981.HK) With technological advancements and a recovery in market demand, it is expected to maintain its leading position.
Vice Chairman of the Hong Kong Society of Financial Analysts, Mr. Poon Tit-shan, stated that SMIC (00981.HK) $SMIC(00981.HK) delivered commendable financial performance in 2024, demonstrating robust growth momentum despite numerous challenges. According to the latest financial report, the group achieved a revenue of RMB 57.796 billion in 2024, a year-on-year increase of 27.72%, setting a new historical record. This growth was primarily driven by significant improvements in the integrated circuit wafer foundry business, which accounted for 92.13% of the company's total revenue, reaching RMB 53.246 billion, a year-on-year increase of 30.3%.
In terms of business segments, the consumer electronics segment performed particularly well, achieving revenue of RMB 20.338 billion, a year-on-year increase of 99.51%, becoming one of the main growth drivers. The smartphone segment also achieved revenue of RMB 14.953 billion, a year-on-year increase of 36.92%. Additionally, the proportion of 12-inch wafer revenue increased to 77%, becoming the core engine of the group's growth.
However, despite the record-high revenue, SMIC's net profit declined, with attributable net profit to shareholders at RMB 3.699 billion, a year-on-year decrease of 23.31%. This was mainly due to an increase in operating costs, which rose by 33.12% year-on-year in 2024 to RMB 47.051 billion, exceeding the growth rate of revenue.
In terms of capacity expansion, SMIC made significant progress. The group's monthly capacity increased from 884,250 wafers in the third quarter of 2024 to 947,625 wafers in the fourth quarter, with capacity utilization remaining at a high level of 85.5%. Furthermore, the group performed well in R&D and capital expenditures, with capital expenditures reaching USD 1.66 billion in the fourth quarter of 2024 and R&D expenditures at USD 217 million, continuing to increase investments in advanced processes, packaging, and testing.
Looking ahead, SMIC's ongoing efforts in capacity expansion and R&D investments are expected to lay a solid foundation for future growth. Despite current challenges in profitability, with continuous technological advancements and a recovery in market demand, the group is poised to maintain a leading position in future competition. Vice Chairman of the Hong Kong Society of Financial Analysts, Mr. Poon Tit-shan, suggests considering buying at HK$45, targeting HK$53, with a stop-loss at HK$42.
Vice Chairman of the Hong Kong Society of Financial Analysts, Mr. Poon Tit-shan
(The author does not hold the relevant shares, but the author's clients hold the relevant shares)
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