Goldman Sachs: Maintains "buy" rating on SMIC, optimistic that domestic demand in China can drive long-term growth.

Goldman Sachs released a research report stating that the second-quarter revenue of SMIC increased by 16% year-on-year, exceeding the bank's and market expectations by 4% and 2%, respectively. The gross profit margin was recorded at 20.4%, slightly higher than the company's guidance and market expectations, mainly due to the increase in production capacity utilization to 92.5%, compared to less than 90% in the first quarter. The group's revenue guidance for the third quarter is expected to increase by 5% to 7% quarterly, in line with market expectations, with a gross profit margin maintained at 18% to 20%, slightly lower than Goldman Sachs' expected 20.6% and market expectations of 21.1%. Looking forward, domestic demand in China is expected to drive long-term growth. Goldman Sachs maintains a "buy" rating on SMIC with a target price of 63.7 Hong Kong dollars, believing that, despite pricing competition and depreciation pressures, the gross profit margin is expected to gradually recover with the improvement in production capacity utilization and the mass production of 12-inch factories.