DBS: Hua Hong Semiconductor Ltd – Hold Target Price HK$17.00

Expect persistently weak gross margin in 1Q24; ASP taking longer to recover

• 4Q23 adjusted net loss (excluding government subsidy) was US$16m, due to prolonged weak end-market demand, in line
• Management guides for weak gross margin of 3-6% in 1Q24, due to persistent ASP pressure in consumer electronics-related products
• FY24F/25F earnings forecast cut by 55%/49% to pencil in ASP pressure on 300mm wafer, prolonged margin shrinkage 
• Maintain HOLD, with lower TP of HK$17.0 due to slower-than-expected recovery profile