"Big Banks" JP Morgan: SMIC's gross margin last quarter was below expectations, maintaining a "Underweight" rating
JP Morgan published a research report indicating that SMIC (00981.HK) had a gross margin in the fourth quarter of last year that fell short of expectations, primarily due to rising depreciation. Looking ahead to 2026, although revenue is expected to grow by around 15%, the significant capital expenditures in the 2025/26 fiscal year will lead to a 30% increase in depreciation costs, resulting in continued pressure on gross margins.
In addition, JP Morgan believes that demand pressures in smartphones, personal computers, and consumer electronics will lead to stagnant average prices that are unlikely to rise significantly, maintaining a "reduce" rating and a target price of 57 yuan
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