Daily Investment Strategy
Daily focus：Hua Hong Semiconductor (1347)
Hua Hong Semiconductor announced its third-quarter 2025 results. Sales revenue reached a record high of US$635 million, representing a year-on-year increase of 20.7% and a quarter-on-quarter increase of 12.2%. Gross margin was 13.5%, exceeding company guidance, up 1.3 percentage points year-on-year and 2.6 percentage points quarter-on-quarter. This growth was mainly driven by a recovery in global semiconductor demand and an increase in average selling price (ASP). Third-quarter profit attributable to owners of the parent company was US$25.7 million, a year-on-year decrease of 42.6%, but a significant quarter-on-quarter increase of 223.5%. Looking ahead, the company expects fourth-quarter sales revenue to be between US$650 million and US$660 million, with a gross margin expected to be between 12% and 14%. Management stated that, benefiting from lean management, the company's capacity utilization rate remained high. ASP increased by 5% both year-on-year and quarter-on-quarter in the third quarter, and this improving trend continued into the fourth quarter. Strong gross margin performance was primarily due to higher average selling prices and optimized product mix.
Weak Labor Market Exacerbates US Stock Market Volatility
The three major US stock indices saw a significant pullback yesterday, with the S&P 500 closing down 1.12% at 6720 points, mainly dragged down by concerns about the valuation of AI stocks. October layoffs surged to 153,074, a 183% increase from September, marking the highest October figure in 22 years. This reflects companies adjusting their workforce amid the AI boom, while the government shutdown limited official economic data, amplifying market unease. Although the ADP private employment report showed 42,000 new jobs added in October, exceeding expectations, the overall labor market slowdown was evident, potentially prompting the Federal Reserve to further cut interest rates to support the economy. However, this development also triggered recession fears, leading to a more cautious investor sentiment. Investors anticipate future policy adjustments will impact corporate profits and consumer spending, potentially increasing market volatility.
Hong Kong Stock Connect saw a net inflow of HK$5.48 billion on Thursday, with XPeng Motors (9868) experiencing the largest net inflow at HK$1.21 billion, followed by Southern Hang Seng Technology (3033). On the other hand, Weichai Power (2338) recorded the largest net outflow at 550 million yuan, followed by Pop Mart (9992).
Leung Kai Tong is a SFC licensed person accredited to KGI Group to carry on regulated activities (for details, please refer to https://apps.sfc.hk/publicregWeb/indi/ADU276/details). He and/or his associate do not have any financial interest in the recommended issuer or new listing applicant.
The materials contained herein are provided by KGI Asia Limited ("KGI") for information only. While such materials are based on or derived from sources believed to be reliable, KGI makes no representation or warranty (express or implied) as to their accuracy or reliability. Neither the information nor the opinions expressed herein constitute, or are to be construed as, an offer or invitation or solicitation of an offer to buy or sell any securities or investments. KGI and its officers, employees, agents and affiliates may have interests in the securities or investments covered herein and accept no liability whatsoever for any loss or consequence whatsoever (whether direct or indirect) resulting from any use of or reliance by you on such materials.
