Lyon: Raises the target price for SMIC's AH shares, maintains "outperform" rating.

Lyon released a report indicating that SMIC's Q2 revenue and gross margin both exceeded the upper guidance limit, and the guidance for Q3 is also higher than market expectations. The company's Q2 shipment growth benefited from capacity ramp-up and demand from AI-related chip orders. SMIC is optimistic about the demand outlook, driven by AI, the return of overseas orders, and localization efforts. Additionally, the company expects wafer prices to remain stable at least throughout 2026. The firm has raised its earnings forecasts for SMIC for 2026, 2027, and 2028 by 69%, 44%, and 38% respectively, and has adjusted the target price for H shares/A shares from HKD 94.1/ RMB 153.4 to HKD 97.5/ RMB 180.2, maintaining an "outperform" rating.