Technology / Semiconductor / Internet Research

Nicolas Baratte

Nicolas Baratte has been a financial analyst since 2000, covering the Semiconductor sector and Global Technology. Nicolas has worked on the sell-side for JPMorgan, CLSA. On the buy-side for a Tiger fund and Prudential. Nicolas has covered semiconductors, Asian hardware and components, and the Global Tech supply chain. Nicolas lives mostly in Taiwan, sometimes in France and is in New York regularly.

Key Indicator Updates: Semi Sales, WFE Forecast, Latest Taiwan Monthlies & A Blow Out April For TSMC

TSMC (2330.TT) Outlook After Intel 18A Setback

Just Listen to Jensen (And Lisa): TSMC, Intel, Samsung

HHGrace. Yikes! Things Just Got Really Ugly

Q2'23 Foundry Flounders As Inventory Stubbornly Lingers

[Hua Hong (1347 HK, BUY, TP HK$34) TP Change]: Valuation Is Attractive Post-Shanghai Listing

Equity Bottom-Up

Hua Hong Semiconductor / Equity Bottom-Up

<ul>
<li>Operating loss in 1Q25 will persist in 2Q25 – I expect throughout 2025. Hua Hong rapid capacity increase is supposedly sold out but D&amp;A is increasing much faster than revenue. </li>
<li>Consensus is not expecting an end-demand slowdown resulting from US import tariffs, or sluggish China domestic consumption. Consensus expects Hua Hong to sell its capacity increase fully. </li>
<li>Given losses in 1H25, Consensus EPS forecast is too high for 2025, probably for 2026 as well. Stock is expensive at 43x 2025 EPS, EPS forecasts looks too high.</li>
</ul>


Operating loss in 1Q25 will persist in 2Q25 – I expect throughout 2025. Hua Hong rapid capacity increase is supposedly sold out but D&amp;A is increasing much faster than revenue. 
Consensus is not expecting an end-demand slowdown resulting from US import tariffs, or sluggish China domestic consumption. Consensus expects Hua Hong to sell its capacity increase fully. 
Given losses in 1H25, Consensus EPS forecast is too high for 2025, probably for 2026 as well. Stock is expensive at 43x 2025 EPS, EPS forecasts looks too high.


Hua Hong: Very Poor Margins to Continue, Operating Losses for Longer