External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Thematic (Sector/Industry)

<ul><li>After a strong rally driven by AI/ChatGPT theme in past three months (note in Feb), we believe most near-term positives have been priced in AI-tech value chain (+65%/146%/45%/62% YTD for chip/optical/PCB/server), and we expect profit-taking pressure ahead of 1Q23 earnings season in late April.</li><li>We suggest to switch into three themes we addressed in Jan (note) which will continue to drive supply chain opportunities into 2Q23E, including demand recovery, MR innovation and localisation.</li><li>We recommend to focus on recovery plays (Sunny Optical, SG Micro and 3Peak), innovation (Cowell, Luxshare, Goertek for MR) and semi localization (Hua Hong Semi, NAURA, AMEC).</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

After a strong rally driven by AI/ChatGPT theme in past three months (note in Feb), we believe most near-term positives have been priced in AI-tech value chain (+65%/146%/45%/62% YTD for chip/optical/PCB/server), and we expect profit-taking pressure ahead of 1Q23 earnings season in late April.We suggest to switch into three themes we addressed in Jan (note) which will continue to drive supply chain opportunities into 2Q23E, including demand recovery, MR innovation and localisation.We recommend to focus on recovery plays (Sunny Optical, SG Micro and 3Peak), innovation (Cowell, Luxshare, Goertek for MR) and semi localization (Hua Hong Semi, NAURA, AMEC).Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Technology – Switching from AI/ChatGPT to Demand Recovery

<ul><li>We hosted an investor field trip to visit 5 fabless, 2 SPE and 1 semi material companies in Shanghai last week.</li><li>Based on our trip, we reaffirmed our view on a 2H23 recovery for major Chinese fabless names, and an uncertain 2023 for Chinese SPE/materials companies.</li><li>Our check also suggested that foundry capex/production cuts have started and inventory level is improving gradually. </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

We hosted an investor field trip to visit 5 fabless, 2 SPE and 1 semi material companies in Shanghai last week.Based on our trip, we reaffirmed our view on a 2H23 recovery for major Chinese fabless names, and an uncertain 2023 for Chinese SPE/materials companies.Our check also suggested that foundry capex/production cuts have started and inventory level is improving gradually. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Technology – Semi Field Trip Takeaways

<ul><li>ASML and LAM announced solid 3Q22 revenue/earnings (+6%/21% QoQ, +10%/16% QoQ) last week, and guided conservative 2023 outlook due to US’s new semi export controls to China and customer demand weakness on macro concerns, esp. memory segment.</li><li>Regarding new US export restrictions, LAM expected revenue impact of US$2-2.5bn (12-15% of sales) in 2023, and ASML estimated indirect impact of 5% on its backlog in 2023 as DUV systems for mature nodes can still be shipped to China.</li><li>Regarding business outlook, LAM guided 20% WFE market decline in 2023 due to industry slowdown, while ASML expected limited impact given strong backlog for advanced nodes and capacity expansion.</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

ASML and LAM announced solid 3Q22 revenue/earnings (+6%/21% QoQ, +10%/16% QoQ) last week, and guided conservative 2023 outlook due to US’s new semi export controls to China and customer demand weakness on macro concerns, esp. memory segment.Regarding new US export restrictions, LAM expected revenue impact of US$2-2.5bn (12-15% of sales) in 2023, and ASML estimated indirect impact of 5% on its backlog in 2023 as DUV systems for mature nodes can still be shipped to China.Regarding business outlook, LAM guided 20% WFE market decline in 2023 due to industry slowdown, while ASML expected limited impact given strong backlog for advanced nodes and capacity expansion.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Technology - Implications of global SPE leaders 3Q22 results on semi industry outlook

<div><div><div><div><ul><li>US Department of Commerce announced new set of export controls on 7 Oct (link) that semiconductors made with US technology for use in advanced computing chips, supercomputers, and advanced semiconductors can only be sold to China with an export licence.</li><li>This first rule targets to 1) tighten existing restrictions on logic IC of 16nm/14nm or below (i.e. FinFET or GAAFET), 2) extends restrictions to memory IC category (DRAM of 18nm or below, and NAND with 128-layer or more), and 3) foreign-owned production facilities located in China will need to apply for approval for related equipment on a case- by-case basis.</li><li>The second rule added China’s memory chipmaker Yangtze Memory and 30 other Chinese entities to “Unverified list”. </li></ul></div></div></div></div><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

US Department of Commerce announced new set of export controls on 7 Oct (link) that semiconductors made with US technology for use in advanced computing chips, supercomputers, and advanced semiconductors can only be sold to China with an export licence.This first rule targets to 1) tighten existing restrictions on logic IC of 16nm/14nm or below (i.e. FinFET or GAAFET), 2) extends restrictions to memory IC category (DRAM of 18nm or below, and NAND with 128-layer or more), and 3) foreign-owned production facilities located in China will need to apply for approval for related equipment on a case- by-case basis.The second rule added China’s memory chipmaker Yangtze Memory and 30 other Chinese entities to “Unverified list”. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Technology - Implications of US’s new chip export restrictions to China

Equity Bottom-Up

Hua Hong Semiconductor / Equity Bottom-Up

<ul><li>Hua Hong Semi released its 2Q25 earnings. Revenue was RMB566mn, up 18.3%/4.6% YoY/QoQ, driven by increased wafer shipments (18.0%/6.0% YoY/QoQ).</li><li>The results were in line with guidance and Bloomberg consensus. GPM improved 1.6ppts sequentially to 10.9%, beating guidance (7%-9%) and consensus (8.3%).</li><li>NPM rose to 1.6% from 0.7% in 1Q25 on better GPM and increased other gains (subsidies etc.). </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Hua Hong Semi released its 2Q25 earnings. Revenue was RMB566mn, up 18.3%/4.6% YoY/QoQ, driven by increased wafer shipments (18.0%/6.0% YoY/QoQ).The results were in line with guidance and Bloomberg consensus. GPM improved 1.6ppts sequentially to 10.9%, beating guidance (7%-9%) and consensus (8.3%).NPM rose to 1.6% from 0.7% in 1Q25 on better GPM and increased other gains (subsidies etc.). Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Hua Hong Semi (1347 HK) - 2Q Margin Beat, D/G to HOLD Due to Substantial Recent Share Price Gains

China

Hua Hong Semiconductor is a global pure-play semiconductor foundry specializing in embedded/standalone non-volatile memory, power discrete, analog & power management, and logic & RF technologies. The company provides diversified wafer fabrication and supporting services for various specialty process platforms. It is headquartered in Shanghai, China, and was founded in 2005.

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Hua Hong Semiconductor (1347 HK)

China Technology – Switching from AI/ChatGPT to Demand Recovery

After a strong rally driven by AI/ChatGPT theme in past three months (note in Feb), we believe most near-term positives have been priced in AI-tech...

CMB International

China Technology – Semi Field Trip Takeaways

Based on our trip, we reaffirmed our view on a 2H23 recovery for major Chinese fabless names, and an uncertain 2023 for Chinese SPE/materials...

CMB International

China Technology - Implications of global SPE leaders 3Q22 results on semi industry outlook

ASML and LAM announced solid 3Q22 revenue/earnings (+6%/21% QoQ, +10%/16% QoQ) last week, and guided conservative 2023 outlook due to US’s new semi...

CMB International

China Technology - Implications of US’s new chip export restrictions to China

Since SMIC was included on Entity List in 2020, we believe most Chinese foundries focus on expansion on 28nm and above processes.

CMB International

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