HK Stock Market Move | Semiconductor Manufacturing International Corporation (00981) fell more than 3% in the afternoon. JP Morgan said the company's valuation is at a historical high, and the momentum of continuous growth may weaken.

Semiconductor Manufacturing International Corporation (00981) plummeted more than 3% in the afternoon, falling 2.5% to HK$46.75 by the time of publication, with a turnover of HK$6.46 billion. JPMorgan released a research report stating that Semiconductor Manufacturing International Corporation's valuation is currently at historical highs. The bank believes that this kind of valuation is unlikely to sustain. It downgraded its rating from "Neutral" to "Underweight" and raised the target price from HK$24 to HK$32. The bank pointed out that the upside in the first quarter of 2025 was driven by subsidies and pre-shipment demand before the US tariffs took effect, and this trend is likely to reverse in the second half of the year. With the weakening momentum of earlier construction, growth momentum may weaken starting from the second quarter. Additionally, once more production capacity comes online for Semiconductor Manufacturing International Corporation and its Chinese wafer foundry competitors, pricing may become more challenging, potentially keeping gross profit margins below 20%. The bank remains cautious about Semiconductor Manufacturing International Corporation. HSBC's research report stated that the gross profit margin of SMIC in the previous quarter was higher than expected, but due to taxes and an increase in minority interests, some of the financial asset gains were offset, resulting in a net profit of $108 million, lower than the bank's and market expectations of $226 million and $220 million. In addition, the guidance for the first quarter exceeded expectations, but the outlook for the second half of the year is uncertain. HSBC believes that the current stock price does not reflect pricing pressures, tariff impact, and weak demand visibility. It maintains a target price of HK$35 and an "Underweight" rating.