CMB International: Maintain "Buy" rating on Huahong Hongli (01347.HK) with a target price of HKD 160.

Zhuhai International Finance APP has learned that Jiao Yin International released a research report maintaining a "Buy" rating for Huahong Hongli (01347.HK) and has raised the target price to HKD 160, corresponding to 5.0 times the 2027 price-to-book ratio. The company's Q2 2026 performance exceeded expectations, achieving revenue of USD 717.5 million, surpassing the upper guidance limit of USD 700 million, with a gross margin of 16.5%, also exceeding the upper guidance limit of 16%. Management stated that they have received regulatory approval for the acquisition of Huali Micro (Wuchang), which may allow them to begin consolidating Huali Micro's performance in the next quarter, potentially raising the company's overall profit level; excluding Huali Micro, management guides for Q3 2026 revenue of USD 770-780 million and a gross margin of 16%-18%. The bank has adjusted the company's revenue estimates for 2026/27/28 to USD 3.0/3.6/4.05 billion (previously USD 2.84/3.51/3.96 billion) and raised the gross margin estimates to 16.4%/17.4%/18.6% (previously 15.0%/16.3%/16.9%), believing Huahong may continue to benefit from increased demand for AI.