Goldman Sachs: SMIC's Q2 performance exceeded expectations, giving a target price of HK$135 for Hong Kong stocks.

Goldman Sachs released a report stating that SMIC's revenue in the second quarter was $3 billion, a year-on-year increase of 36% and a quarter-on-quarter increase of 20%, exceeding both the bank's and market expectations, as well as surpassing the management's guidance of a quarterly growth of 14% to 16%. During this period, the gross margin was 25.3%, which is higher than the bank's and market's expectations of 21% and 21.4%, and also exceeded the management's guidance range of 20% to 22%. Goldman Sachs noted that the quarter-on-quarter revenue growth was mainly driven by increases in wafer shipments and average selling prices, and attributed the improvement in gross margin to an enhanced product mix and higher average selling prices. Regarding the guidance for the third quarter, the revenue is expected to grow by 2% to 4% quarter-on-quarter, aligning with the bank's and market expectations; the gross margin guidance is set at 26% to 28%, which surpasses the bank's and market expectations. The bank maintains a buy rating for SMIC and is optimistic about the company's long-term growth prospects, believing the growth is driven by increased demand from local fabless semiconductor customers and opportunities related to artificial intelligence. Goldman Sachs set a target price of HKD 135 for the stock.