Morgan Stanley: Maintains "reduce" rating on Semiconductor Manufacturing International Corporation (00981) with a target price of 20.3 Hong Kong dollars.

Morgan Stanley released a research report, maintaining a "reduce" rating on Semiconductor Manufacturing International Corporation (00981) with a target price of HK$20.3. Although Morgan Stanley acknowledges strong growth in advanced node production, they still have concerns about the company's mature node business due to increased competition by 2025. The price-to-earnings ratio for Semiconductor Manufacturing International Corporation in 2025 is 2 times, with a return on average equity of 4.8%, which the bank does not find attractive. The report states that the company has improved its product portfolio, achieving better-than-expected operating targets in the first quarter of 2025, while continuing its active capital expenditure. Morgan Stanley believes that the strong performance in the first quarter of this year by Semiconductor Manufacturing International Corporation is attributed to the product mix driven by Chinese consumer subsidies and high wafer prices for advanced node production. Overall, Semiconductor Manufacturing International Corporation expects revenue growth to outpace industry averages. Due to high capital expenditure in recent years, Morgan Stanley expects the group's depreciation to continue to rise, which could have a negative impact on its profit margin in 2025.