UBS released a research report expressing a more positive view on SMIC (00981), upgrading its rating from "Neutral" to "Buy" and raising the target price from HK$76 to HK$96.2.

This adjustment is based on an unchanged 3.3 times target price-to-book ratio, with the valuation basis rolled forward to the average net book value per share of US$3.7 for 2027-2028, up from the previous US$2.9. However, this is partially offset by downward revisions to earnings forecasts.

UBS believes the market underestimates the extent to which SMIC will benefit from the trend of artificial intelligence semiconductor localization in China. Despite reducing its 2026-2028 earnings forecasts by 17% to 19% to reflect equity dilution and lower assumptions for non-recurring gains, the forecast still exceeds market consensus by approximately 20% to 30%.