HK Stock Market Move | Semiconductor Manufacturing International Corporation (00981) rose over 3% in early trading, Goldman Sachs is optimistic about the company's revenue prospects, and expects gross profit margins to gradually recover.

Semiconductor Manufacturing International Corporation (00981) rose more than 3% in the early trading session, reaching a 3.6% increase at the time of publication, at 30.2 Hong Kong dollars, with a trading volume of 8.15 billion Hong Kong dollars. Goldman Sachs released a research report stating that they continue to be bullish on Semiconductor Manufacturing International Corporation as the leading semiconductor foundry company in China, due to the increasing demand for localized production by its customers. However, concerns and uncertainties regarding valuation persist, including ongoing capacity expansion, increasing supply of mature nodes, intensifying competition, and geopolitical risks. It is expected that in the second half of this year, demand in the industrial and automotive sectors may weaken amidst fierce competition, but should gradually recover as inventory is depleted. With healthier inventory levels and the trend towards localization, the outlook for SMIC's revenue is optimistic. The bank also mentioned that while they are optimistic about SMIC's sales growth, the average selling price may see only moderate growth due to increasing supply of mature nodes in China. 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, maintaining a "Neutral" rating.