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Hua Hong Semiconductor Ltd Shs Unitary 144A/Reg S 01347

Morningstar Rating
HK$22.40 −1.20 (5.08%)
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Company Report

Hua Hong's Cash Flows Threatened by High Capital Spending

As the second-largest foundry in China, Hua Hong Semiconductor, or Hua Hong, focuses on providing specialty products that perform narrower sets of tasks compared with the most advanced processors. These tasks range from storing small bits of data for very long periods to regulating electricity flows. Hua Hong has no intention to offer cutting-edge chips like smartphone and data center processors, owing to financial, scale, and personnel constraints. Most of Hua Hong’s offerings are commoditized as they are fabricated on process technologies that first debuted over a decade ago. Customers can obtain a perfect or very close substitute at other chipmakers barring major shortages, which limits Hua Hong’s pricing power.

Price vs Fair Value

01347 is trading at a 687% premium.
Price
HK$23.60
Fair Value
HK$85.40
Uncertainty
High
1-Star Price
HK$67.58
5-Star Price
HK$2.60
Economic Moat
Wrrg
Capital Allocation
Kqbzllyvp

Bulls Say, Bears Say

Bulls

Hua Hong can procure from Chinese equipment suppliers as the latter improve their product offerings.

Bears

Aggressive expansion from local peers like Nexchip may erode Hua Hong’s profitability.

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News

Trading Information

Previous Close Price
HK$23.60
Day Range
HK$22.2523.80
52-Week Range
HK$13.8027.40
Bid/Ask
HK$22.35 / HK$22.40
Market Cap
HK$38.46 Bil
Volume/Avg
9.8 Mil / 14.9 Mil

Key Statistics

Price/Earnings (Normalized)
14.61
Price/Sales
1.96
Dividend Yield (Trailing)
0.70%
Dividend Yield (Forward)
0.70%
Total Yield
0.70%

Company Profile

Hua Hong Semiconductor, or Hua Hong, is the second-largest Chinese foundry and the seventh-largest globally. Its current form is a result of an intragroup restructuring completed in 2013. Hua Hong is headquartered in Shanghai with another plant in Wuxi, China, and has sales offices in Japan, Taiwan and the U.S. It employs more than 6,700 employees. Hua Hong’s products are used on smartphones, PCs, for the Internet of Things, data centers, and for automotive and industrial purposes, and so on, but it focuses on more mature process technologies.
Sector
Technology
Industry
Semiconductors
Stock Style Box
Large Value
Total Number of Employees
6,863

Competitors

Valuation

Metric
01347
TSM
005930
Price/Earnings (Normalized)
14.6132.7928.70
Price/Book Value
0.827.741.56
Price/Sales
1.9612.281.86
Price/Cash Flow
6.9620.419.51
Price/Earnings
01347
TSM
005930

Financial Strength

Metric
01347
TSM
005930
Quick Ratio
6.062.101.78
Current Ratio
6.762.392.55
Interest Coverage
2.1280.7315.09
Quick Ratio
01347
TSM
005930

Profitability

Metric
01347
TSM
005930
Return on Assets (Normalized)
2.43%16.16%4.72%
Return on Equity (Normalized)
4.58%26.16%6.10%
Return on Invested Capital (Normalized)
3.04%19.14%4.99%
Return on Assets
01347
TSM
005930
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