Nomura Securities Upgrades SMIC (SMI) to Buy

Nomura Securities upgraded Semiconductor Manufacturing International (NYSE: SMI) from Neutral to Buy and raised its price target from HKD 0.68 to HKD 1.10.

Analyst Leping Huang commented, "We upgrade SMIC to Buy and lift our TP by 61% after our recent China semiconductor industry visits. As the largest China-based foundry, we think SMIC is entering a multi-year growth stage driven by both the government's favorable industry policies and the rise of IC foundry demand from domestic consumer electronics OEMs (eg, Huawei/Lenovo) and fabless players (eg, Hisilicon/SPRD/RDA). Considering the large gap between A/H shares in semiconductor stocks' valuations, we think SMIC will also benefit from Shanghai-HK Stock Connect. While its A-share peers currently trade at 3.3x FY15F BVPS, SMIC is trading at only 1.1x. Our new TP of HKD1.1 is based on 1.6x FY15 BVPS (of USD0.09), which is at the high-end of its historical valuation, but still a 50% discount to its A-share peers. We think SMIC justifies this valuation considering its core value in China semi eco-system."

For an analyst ratings summary and ratings history on Semiconductor Manufacturing International click here. For more ratings news on Semiconductor Manufacturing International click here.

Shares of Semiconductor Manufacturing International closed at $4.79 yesterday.

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