Shares fall 8.2% as quarterly net profit declines

  • Hua Hong Semiconductor shares dropped 8.2% after reporting lower quarterly net profit
  • Fourth-quarter net profit fell to US$35.39 million from US$159.14 million in the year-earlier period
  • Gross margin slid to 4.0% from 38.2% due to lower average selling prices and capacity utilization
  • Company forecasts revenue of US$450 million to US$500 million for the first quarter
  • Citi maintains a sell rating on Hua Hong, citing uncertain demand recovery outlook in China
  • Jefferies analysts say Hua Hong would have posted a net loss in the fourth quarter without government subsidies
  • China’s rapid expansion of supply capacity could put pressure on Hua Hong’s average selling price and utilization rate

Hua Hong Semiconductor’s shares fell sharply after reporting significantly lower quarterly net profit. The company’s fourth-quarter net profit dropped to US$35.39 million from US$159.14 million in the year-earlier period. This decline was attributed to lower average selling prices and capacity utilization, resulting in a gross margin slide from 38.2% to 4.0%. Hua Hong Semiconductor forecasts revenue of US$450 million to US$500 million for the first quarter. However, Citi maintains a sell rating on the stock due to the uncertain demand recovery outlook in China. Jefferies analysts also note that Hua Hong would have posted a net loss in the fourth quarter without government subsidies. Additionally, China’s rapid expansion of supply capacity could put pressure on Hua Hong’s average selling price and utilization rate due to intense competition.

Public Companies: Hua Hong Semiconductor (N/A)
Private Companies:
Key People: Junjun Tang (President and Executive Director at Hua Hong), Laura Chen (Analyst at Citi), Jack Chen (Analyst at Citi)

Factuality Level: 8
Justification: The article provides specific information about Hua Hong Semiconductor’s lower quarterly net profit, its reasons, and the forecast for the first quarter. It also includes opinions from analysts at Citi and Jefferies. However, the article does not provide any counterarguments or perspectives from other sources, which could affect the overall factuality level.

Noise Level: 4
Justification: The article provides relevant information about Hua Hong Semiconductor’s lower quarterly net profit and the reasons behind it, such as the global chip-industry slowdown. It includes quotes from the company’s president and executive director, as well as analysts from Citi and Jefferies. However, the article lacks in-depth analysis of the long-term trends or possibilities for the semiconductor industry and does not provide actionable insights or solutions.

Financial Relevance: Yes
Financial Markets Impacted: Shares of Hua Hong Semiconductor

Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article discusses the financial performance of Hua Hong Semiconductor, reporting significantly lower quarterly net profit and a decline in shares. There is no mention of an extreme event.

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