On Tuesday, Nomura/Instinet adjusted its financial outlook for Hangzhou Silan Microelectronics Co Ltd (600460:CH) shares, raising the price target to RMB18.00 from the previous RMB17.00, while the stock's rating remains at Neutral.
The revision follows the company's second-quarter financial results and a subsequent meeting with investors and analysts on Sunday, August 19, 2024.
Silan Microelectronics reported a second-quarter loss of CNY10 million, which was unexpectedly lower than the projected net profit of CNY176 million according to Bloomberg consensus.
The loss was attributed to a decline in gross profit margin, which dropped to 18.0% from 22.5% in the same period the previous year and 22.1% in the first quarter of 2024. The company also faced an asset impairment loss, and financial expenses contributed to the loss.
Despite the reported loss, Silan Microelectronics' revenue increased 17% year over year to CNY2.8 billion. This figure surpassed the consensus estimate by 3%, which had anticipated revenues of CNY2.7 billion.
The growth was driven by notable increases in the company's power IC and LED businesses, which saw year-over-year increases of 29% and 33%, respectively. However, the power device business saw a more modest growth of 4% year-over-year.
Looking ahead, Silan Microelectronics' management has indicated limited downside risks for IGBT prices and gross margins in the second half of 2024. Nonetheless, they do not anticipate near-term improvements in average selling prices due to competitive pressures from overseas markets.
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