UBS: Raised Unisplendour Semiconductor (01347) target price to 22.5 Hong Kong dollars, maintaining a "sell" rating, it is expected that gross profit margin will be under pressure.

According to the Zhtng Financial APP, UBS released a research report stating that Huahong Semiconductor (01347) recorded a 5% quarterly increase in second-quarter sales to $566 million, in line with guidance, driven by a 6% increase in wafer shipments; gross margin was 10.9%, better than guidance, mainly due to increased capacity utilization, with Power Management Integrated Circuits (PMIC) as the main growth engine. Based on rapid depreciation and limited pricing power due to industry oversupply, the bank will maintain a cautious view on Huahong's gross margin and return on equity (ROE) outlook, raising the target price from HK$20 to HK$22.5, and maintaining a "sell" rating.