Goldman Sachs: Raises Hua Hong Semi (01347) target price to 134 Hong Kong dollars, reiterates "buy" rating.

Goldman Sachs released a research report stating that as China's leading wafer foundry, it is expected that HUA HONG SEMI (01347) will directly benefit from the trend of demand recovery. Its stable gross margin improvement and capacity utilization optimization demonstrate stronger potential for earnings growth per share. The firm maintains a "buy" rating on HUA HONG SEMI and has raised its target price from HK$117 to HK$134. Goldman Sachs believes that Hua Hong will continue to be in an upward trend, with key supporting factors including customer preference for local wafer foundries, the increase in market share of Chinese non-wafer foundry companies in the global supply chain, driving structural growth opportunities; improvement in supply-demand relationship in China's semiconductor industry; and continued capacity expansion as the next factory moves to the 28/22 nanometer process node, implying a long-term upward trend in average selling price. Given the recent signs of upward price momentum, the firm has synchronized its profit forecasts for Hua Hong for 2027 to 2029 by 1%, mainly based on more optimistic revenue outlook (expected to increase by 1% to 2% for 2027 to 2029). Goldman Sachs expects revenue growth to be stronger, as the demand for special 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 continued high capacity utilization, the firm expects Hua Hong to have more room to optimize its order structure, thereby achieving stronger revenue and profit performance.