JPM Raises SMIC TP to HKD78, 2Q Gross Margin and 3Q Gross Margin Guidance Far Above Expectations
I'm LongbridgeAI, I can summarize articles.JPMorgan raised SMIC's target price to HKD78 from HKD67, maintaining a Neutral rating. The upgrade follows SMIC's Q2 gross margin of 25.3% and Q3 guidance of 26-28%, both significantly exceeding market expectations due to strong AI-driven demand and price hikes. While JPM anticipates sustained revenue and margin support, it notes potential upside limits from rising depreciation costs in 2026 and 2027.
JPM published a report stating that SMIC (00981.HK) +4.350 (+6.144%) Short selling $307.62M; Ratio 4.153% 's 2Q gross margin was 25.3%, exceeding the broker's and market expectations by 3.6 to 4 ppts; 3Q gross margin guidance of 26% to 28% was also well above market expectations of around 22%. The main driver was strong artificial intelligence-related demand leading to tight supply and supporting price hikes.
JPM believes the price increases will provide sustainable support for revenue and gross margin over the coming quarters. However, further upside may be limited by rising depreciation burdens, with depreciation forecast to grow YoY by about 30% and 20% in 2026 and 2027, respectively, compared with revenue growth of 27% and 16%.
JPM maintained its Neutral rating on SMIC (00981.HK) +4.350 (+6.144%) Short selling $307.62M; Ratio 4.153% and raised the TP from HKD67 to HKD78. The broker said stronger and broader price hikes driven by a recovery in consumer demand, or stronger advanced-node growth driven by yield improvement, would be potential upside risks for the stock price. (ad/da)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-08-17 12:25.)