SMIC Q4 Results: Revenue Forecast, Net Profit Forecast, and Share Performance

Semiconductor Manufacturing International Corp. (SMIC) is set to announce its fourth-quarter results on Tuesday. Here are the key details you should know:

Revenue Forecast

According to a FactSet poll of analysts, SMIC is expected to report revenue of $1.66 billion for the fourth quarter, a 2.2% increase compared to the previous year. In November, the company projected a 1% to 3% rise in revenue from the third quarter, when it recorded a top line of $1.62 billion.

Net Profit Forecast

The FactSet poll also estimates SMIC's net profit to be around $146.0 million. This suggests a 62% decline from the $385.5 million reported a year ago, but a 55% increase from the third quarter's $94.0 million. Sze Ho Ng, managing director at China Renaissance Securities, explained that the decrease in profit can be attributed to a "lack of lumpy nonrecurring gains."

Share Performance

SMIC's Hong Kong-listed shares have experienced a 29% decline this year, while its China-listed shares have dropped about 19%.

What to Watch For:

CAPEX

Investors will closely monitor SMIC's capital expenditure figure for 2023 and any spending guidance for 2024. The company's high capex has raised concerns about its cash flow. Phelix Lee, an equity analyst at Morningstar, emphasized the importance of these figures. SMIC previously announced that it expects the 2023 capex to reach $7.5 billion, which represents an 18% increase despite the industry downturn.

Gross Margin

SMIC stated that it anticipates a gross margin of 16%-18% in the fourth quarter, down from 19.8% in the third quarter due to depreciation pressure. Investors will observe margin trends to assess the cost of materials and parts in the semiconductor industry.

Geopolitical Tensions

Given the uncertainties surrounding US restrictions on SMIC, there may be a need for the prompt delivery of equipment, as explained by Morningstar's Lee.