SMIC's revenue in the first half of the year increased by 23.2% year-on-year, while net profit decreased by 45.1% year-on-year | Financial Report Insights

In the first half of the year, SMIC's revenue increased by 23.2% year-on-year, but due to factors such as changes in product mix and increased depreciation, net profit in the first half of the year decreased by 45.1%.

On Thursday, August 29, SMIC A-shares released the 2024 interim report.

1) Key Financial Data:

Revenue: The company achieved operating income of RMB 26.269 billion in the first half of the year, a year-on-year increase of 23.2%;

Profit: Net profit attributable to shareholders of the listed company was RMB 1.646 billion, a year-on-year decrease of 45.1%;

The gross profit margin was 13.9%, a decrease of 8.5 percentage points from 22.4% in the same period last year; the net profit margin was 6.3%, a decrease of 10.9 percentage points from the same period last year.

Cash Flow: Net cash flow generated from operating activities was RMB 3.25 billion, a decrease of 70.4% from the previous year.

2) Main Revenue:

The group achieved main business revenue of RMB 25.932 billion, an increase of 23.5% year-on-year. Among them, wafer foundry business revenue was RMB 24.108 billion, an increase of 25.7% year-on-year.

According to the financial report, the decrease in net profit in the first half of the year was mainly due to changes in product mix, increased depreciation, and decreased investment income and net interest income.

At the close on August 29, SMIC fell by 0.2% to RMB 47.26, with a total market value of RMB 376 billion.

SMIC stated:

During the reporting period, the company continuously enhanced its core competitiveness and corporate value, actively took innovative measures in management improvement, team building, cost reduction and efficiency enhancement, technological breakthroughs, and market expansion, and fully implemented various tasks. In the overall environment of the industry being in the early stage of recovery, the company quickly identified incremental product categories in customer market share, proactively responded to changes in customer demand, adjusted the priority combination of products in a timely manner, provided customers with comprehensive platform technical support and professional design services, and actively promoted win-win cooperation with customers. With the joint efforts of all employees, the company has solidified its short-term operational layout while continuously implementing medium and long-term plans, continuously improving in the four aspects of "stable capacity, cost control, technological leadership, and customer first," and firmly grasping the overall trend of long-term semiconductor growth.

In mid-August, SMIC announced that sales revenue for the second quarter of 2024 was USD 1.9 billion (approximately RMB 13.48 billion), an increase of 9% compared to the previous quarter, with a gross profit of USD 265 million and a gross profit margin of 13.9%. The company expects revenue in the third quarter of this year to increase by 13% to 15% compared to the previous quarter (USD 2.15-2.19 billion), with a gross profit margin ranging from 18% to 20% Looking ahead to the second half of the year, SMIC maintains a cautious optimism:

The company's capacity expansion is progressing steadily, key projects are showing initial results, the cooperative ecosystem is accelerating, and management efficiency is comprehensively improving. In the third quarter of this year, there is a shortage of chip wafer capacity in key market areas, with tight demand for the company's 12-inch capacity and prices trending upwards.

Furthermore, all of the company's capacity expansions this year are in 12-inch, with relatively higher added value. The new expanded capacity is fully utilized, generating revenue and promoting optimization adjustments to the product mix. The fourth quarter is typically a traditional off-season, and the company's view is cautiously optimistic, although there is still some uncertainty