UBS: Downgrade Hang Seng Semiconductor (01347.HK) to "Sell" with a target price of 20 Hong Kong dollars.

The China Securities and Finance (CJ Securities and Finance) app learned that UBS released a research report stating that they have downgraded the rating of Huahong Semiconductor (01347.HK) from "Neutral" to "Sell", with a target price of 20 Hong Kong dollars. The stock price of Huahong has risen by 46% in the past year, believed to be mainly due to the increasing optimism about localization in China, as well as the positive factors brought about by the operational restructuring by the new CEO Bai Peng. The bank stated that due to Huahong's smaller scale compared to SMIC, the expansion of 12-inch wafer capacity may result in 39% and 20% depreciation growth in the next two years. The bank predicts that the group's future ROE support will be weaker in the next 3 to 4 years, at -0.3%, compared to 9.3% for SMIC. In addition, Huahong's 55 and 90 nanometer wafer prices are $1,000, significantly lower than the industry average of around $1500, reflecting the competition among foundries in the commercialization of 12-inch wafers.