Goldman Sachs has issued a research report revising its financial projections for Hua Hong Semiconductor (01347). The firm has trimmed its 2025 earnings per share (EPS) estimate by 2%, while concurrently lifting its gross margin forecasts for the years 2026 through 2029 by 0.4, 0.3, 0.2, and 0.1 percentage points, respectively. Additionally, it has increased its capital expenditure projections for this period by an average range of 1% to 2%. Despite these adjustments, the target price for Hua Hong Semiconductor's stock is maintained at HK$117, accompanied by a 'Buy' recommendation.

In the third quarter, Hua Hong Semiconductor reported revenue of US$635 million, marking a 21% increase year-on-year and a 12% rise quarter-on-quarter. This performance was coupled with an improvement in gross margin to 13.5% and a reduction in operating losses. Although net profit fell short of the bank's expectations by 13% due to heightened tax expenses, it still outperformed the broader market consensus.

Looking ahead, the company anticipates revenue growth of 2% to 4% on a quarter-on-quarter basis for the fourth quarter, with gross margin projected to range between 12% and 14%. When calculated at the midpoint, the revenue guidance is 7% and 1% below the bank's and market expectations, respectively. Conversely, the midpoint of the gross margin guidance exceeds the bank's and market expectations by 1 and 1.7 percentage points, respectively.