Yamato: Upgrade rating of Shanghai Microelectronics (01347) to "Buy" and raise target price to 110 Hong Kong dollars.

Zhixin Financial APP learned that Daiwa released a research report stating that Hua Hong Semiconductor (01347) net profit for the third quarter fell below expectations, affected by income tax and minority equity, but other key indicators exceeded the bank's expectations. The bank believes that the company will benefit from downstream demand growth, thereby increasing 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 provider of AI collaborative chip wafers, the company will benefit from the continued momentum of AI development next year. Combined with overseas customers' "China for China" strategy, and the synergies brought about by the acquisition of the Fab5 plant, the bank's investment rating for Hua Hong has been upgraded from "hold" to "buy", with a target price raised from HK$42 to HK$110.