Goldman Sachs: Maintains a "neutral" rating on Semiconductor Manufacturing International Corporation (00981) with a target price raised to HK$33.4.

Goldman Sachs released a research report stating that it is optimistic about the revenue prospects of Semiconductor Manufacturing International Corporation (00981) as healthier inventory levels and localization trends drive growth. Overall, the bank expects SMIC's gross margin to gradually recover and has raised its H-share target price from 29.2 Hong Kong dollars to 33.4 Hong Kong dollars, while maintaining a "neutral" rating. Goldman Sachs stated that it continues to view SMIC as a leading Chinese semiconductor foundry company due to increasing demand for localized production from its customers. However, concerns about continued capacity expansion, increased supply of mature node capacity, and intensifying competition remain uncertainties affecting valuation. It is anticipated that in the second half of this year, terminal demand in the industrial and automotive sectors may weaken due to intense competition, but it should gradually recover as inventory digestion is completed. Furthermore, Goldman Sachs has maintained its earnings forecast for SMIC for the fiscal year 2024 largely unchanged, while increasing its forecasts for the fiscal years 2025 to 2029 by 2% to 4%. The bank has raised its revenue forecasts for SMIC for the fiscal years 2025 to 2029 by approximately 1% per year, and increased gross margin estimates by 0.2 to 0.3 percentage points, while keeping operating expense forecasts largely unchanged.