European foreign investment released its latest research report after the UBS financial report, stating that the fourth-quarter performance outlook from the UMC report was worse than expected, and 28 nanometers due to the new capacity of the market to make the supply oversupply next year, the basic operation of UMC The pressure on the face correction is increasing. It is estimated that it will face operating losses in the fourth quarter of this year (2018) and the first quarter of Ming (2019). At the same time, it will lower the forecast of UBS’s earnings per share from 2018 to 2020. In order to maintain the “sell” investment rating, the target price was slightly revised down to 11.5 yuan.
European foreign investment pointed out in the report that the operational outlook released in the UMC report, including wafer shipments, will fall by 4%-5% compared with the third quarter, and the average US dollar price will also fall by 4%-5% compared with the previous quarter. This means that UMC’s fourth-quarter revenue may be reduced by 8-% to 10%, which is lower than the original intra-institutional estimate of 6%, and its gross profit margin will also decline this quarter, and the internal estimate is reduced to 14.2%. At the same time, UMC’s 28-nanometer process shipments have also seen a slowdown; it is expected that it will face operating losses in the fourth quarter of this year (2018) and the first quarter of Ming (2019).
The report further pointed out that UMC and other secondary foundries are expected to continue to experience downward pressure on capacity utilization and profit margins in 2019; this is mainly due to the lack of breakthroughs in advanced processes, consumers/cars. Demand for PC/PC is slowing down, and the 28-nanometer process is oversupply from 2019 to 2020, and the cryptocurrency ASIC customers are shifting from 28nm/14nm process to TSMC 7nm process. Therefore, the downward revision of UEC‘s earnings per share forecast for 2018 to 2020 is 0.4%, 7%, and 6%, respectively. The earnings per share are 0.65 yuan, 0.56 yuan, and 0.63 yuan respectively. The target price is lowered from 12 yuan. To 11.5 yuan, and maintain the sale rating.
European foreign investment pointed out that it is expected that by 2019, 28 nanometer oversupply may lead to a more significant decline in capacity utilization and profit margins. It is expected that UMC’s 28nm capacity utilization rate will fall to 70%-80%, and the process gross margin will be Maintaining below 10% will result in its operating margin of 28nm next year falling from -3% to -5%, due to customers turning to TSMC’s 16nm/12nm process, TSMC at 22nm performance/power and PPA Better; SMIC takes a positive offer for the oversupply of 28 nanometers, and UMC itself lacks a 28nm/22nm CMOS sensing component, power management IC (PMIC) and embedded NAND flash dedicated process.