BOCI Securities released a research report stating that it believes HUA HONG SEMI (01347) will continue to benefit from strong domestic substitution momentum and AI-related demand. The firm maintains a "Buy" rating and raises the target price from HK$51.1 to HK$94.5, based on a forecasted 3.2x price-to-book ratio.

The report noted that HUA HONG SEMI delivered solid Q3 results, with revenue meeting expectations and gross margin improving by 2.6 percentage points quarter-on-quarter to 13.5%, driven by better-than-expected wafer shipments, average selling prices (ASP), and capacity utilization. However, net profit fell short of targets due to high depreciation costs. The Q4 outlook appears mixed.

BOCI highlighted that HUA HONG SEMI's management guided Q4 2025 revenue at $650–660 million, with gross margin expected to remain stable (2 percentage points above consensus), supported by price increases and demand growth in most sub-sectors except discrete components, which remain a drag.

While BOCI largely maintained its revenue estimates, it raised gross margin forecasts by 50–79 basis points, factoring in strong ASP growth amid full capacity utilization in H2 2025. However, price wars in discrete power components, rising engineering costs, and higher depreciation may limit near-term margin upside. The firm also raised its 2026 and 2027 EPS forecasts by 5% and 4%, respectively.