HK Stock Market Move | HUA HONG SEMI (01347) falls more than 4% again, gross profit margin and outlook better than expected, institutions say valuation is already high.

HUA HONG SEMI (01347) fell over 4% again, dropping 4.58% at the time of writing, to HK$71.8, with a turnover of HK$2.197 billion. On the news front, HUA HONG SEMI had previously released its third-quarter report, with quarterly revenue of $635 million, a year-on-year increase of 20.7%, in line with guidance and hitting a record high. Capacity utilization was as high as 109.5%, with a gross margin of 13.5% exceeding guidance. China International Capital Corporation pointed out that it slightly raised its profit forecast for HUA HONG SEMI in 2025, mainly due to better-than-expected gross margin expectations for the third and fourth quarters of 2025. Considering the level of return on net assets, the bank believes that the valuation of the stock is relatively high at present, hence the rating has been downgraded from "outperform the market" to "neutral". Daiwa Securities noted that HUA HONG SEMI's third-quarter net profit fell below expectations due to income tax and minority equity effects, but other key indicators exceeded the bank's expectations. The bank believes that the company will benefit from downstream demand growth, thereby enhancing the company's bargaining power and business flexibility, driving improvements in product mix, average selling price, and profit margins. In addition, the bank believes that as a wafer supplier for AI collaborative chips, the company will benefit from the continued momentum of AI development next year.