Earning First Take: FY21 Net profit surge 113.3% y-o-y
- FY21 profit surged by 113.3% y-o-y, ahead of the market consensus by 8.7%
- Outstanding performance due to the robust wafer shipment growth, driven by the prolonged chip shortage in mature node
- China’s revenue share kept increasing and revenue from Industrial & automotive grew fastest among all applications
- Expect near-term share price support
- Please find out more at DBS Insights Direct:
What’s New
– Hua Hong SEMI (1347 HK) announced its 4Q and 4QFY21 results during the lunch break of HK market today.
– Revenue surge 69.6% y-o-y to US$ 1.63bn.
– Segment-wise, 8-inch business revenue increased by 28.1% y-o-y to US$ 1.15bn, with a gross margin up 7.7 ppts y-o-y.
– 12-inch business revenue rockets 650.9% y-o-y to US$ 481 m, with a gross margin up 11.4 ppts q-o-q.
– Net profit rose 113.3% y-o-y to US$ 212.0 m, ahead of the market consensus by c.8.7%, EPS was US$ 0.163.
Our View:
– The unaudited FY21 profit beats FY21 market consensus by 8.7%. The outstanding performance in profit is due to the robust shipment growth of both 8-inch and 12-inch wafers, driven by the prolonged chip shortage in the mature process node.
– Utilization rate of both old capacity keep at a high level while that of newly installed capacity continued to increase on the back of strong foundry demand
– Revenue share from China keep increasing and revenue from Industrial & automotive has the highest growth rate among all applications
– We expect both 8-inch and 12-inch foundry businesses to remain in huge demand in FY22 under the foundry supply tightness in mature nodes, localization of foundry in China and the long-lasting auto chips shortage.
– An expansion to 95K WPM of 12-inch foundry is expected to be achieved in FY22 which drive annual shipment growth
– Near-term share price support is expected owing to FY21 profit ahead of the market consensus and expectation of quarterly revenue growth in 1Q22 in management’s guidance
– We maintain a BUY rating with TP at HK$58.9 based on an increasing ROE in FY21-23F driven by the utilisation rate and yield ramp-up in newly installed capacity.