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Stock Code (1347)
News Release
Hua Hong Semiconductor Limited
Reports 2020 Second Quarter Results
All currency figures in this report are in US Dollars unless indicated otherwise. The consolidated financial statements are prepared in accordance with HKFRS.
Hong Kong Special Administrative Region of the People's Republic of China - August 11, 2020.
Hua Hong Semiconductor Limited (SEHK: 1347) (the "Company"), a global, leading pure-play foundry, today announced its consolidated operational results for the quarter ending June 30, 2020.
Second Quarter 2020 Highlights (Unaudited)
- Revenue reached US$225.4 million, 2.0% lower than the prior year but 11.1% over the prior quarter.
- Gross margin was 26.0%, 5.0 percentage points below 2Q 2019 and 4.9 percentage points above 1Q 2020.
- Net profit was US$1.3 million, compared to US$49.9 million in 2Q 2019 and US$2.7 million in 1Q 2020.
- Net profit attributable to shareholders of the parent company was US$17.8 million, compared to US$43.4 million in 2Q 2019 and US$20.3 million in 1Q 2020.
- Basic earnings per share was US$0.014, compared to US$0.034 in 2Q 2019 and US$0.016 in 1Q 2020.
- ROE (annualized) was 3.2%.
Third Quarter 2020 Guidance
- We expect revenue to be approximately US$236 million.
- We expect gross margin to be in the range of 22% to 24%.
1
President's Message
Mr. Junjun Tang, President and Executive Director of the Company, commented on the second- quarter results:
"We are very pleased with Hua Hong Semiconductor's performance in the second quarter of 2020, where both sales and gross margin exceeded guidance. The trough in the first quarter is now behind us. The global semiconductor market continues to exhibit signs of recovery, especially in the Chinese market. Driven by market demand for IGBT, super junction, MCU and CIS products, revenue increased to $225.4 million in the second quarter, with double-digit growth quarter-on-quarter. At the same time, our gross margin increased 4.9 percentage points quarter-on-quarter to 26%, thanks to a higher utilization rate and improvement in product mix."
"Due to the tremendous interest and support for our Wuxi 12-inch project from our customers and partners and the emergence of excellent domestic design companies, the plans for our new 12-inch fab have been accelerated. While ensuring high-yield shipments of existing products, we are advancing certification of multiple technology platforms offering diversified and comprehensive solutions to our customers. Smart card chips, power discrete, and CIS products were delivered to customers first. In the second half, IGBTs, super junctions, and other products will be shipped in succession to meet the needs of emerging markets, such as new energy vehicles."
"The pandemic has not been contained. Guided by 'protect yourself, protect family members, protect Hua Hong people, and protect Hua Hong', we are committed to prevention measures. Maintaining close communication with our domestic and foreign suppliers, we continue to expand our markets and increase cooperation, insuring the company's long-term development. I would like to thank our shareholders, customers, and suppliers for their support and our employees for their unremitting efforts to overcome challenges. Looking forward, we hope the pandemic will be over soon. We are confident in our ability to take advantage of every opportunity and are working hard for another successful half."
2
Webcast/Conference Call Announcement
Date: August 12, 2020 (Wednesday)
Time:04:00 P.M. (Shanghai and Hong Kong)
04:00 A.M. (New York, Wednesday, August 12, 2020)
Presenters: Mr. Junjun Tang, President and Executive Director
Mr. Daniel Wang, Executive Vice President and Chief Financial Officer
Webcast: The call will be webcast live with audio and slides at:
http://www.huahonggrace.com/html/investor_webcast.phporhttps://engage.vevent.com/rt/huahongsemiconductor/index.jsp?seid=140(note:
registration is required to access the webcast)
Dial-in Details: Mainland China | +86 400 624 0406 or +86 800 870 0531 | |
Hong Kong, China | +852 | 3018 6768 |
Taiwan, China | +886 | 2 7703 1751 |
Singapore | +65 6713 5521 | |
United States | +1 347 549 4095 | |
Conference ID: 5675625 |
Recording will be available at http://www.huahonggrace.com/s/investor_webcast.phpfor replay about 24 hours after the event, and will be valid for 12 months. (Replay password: Huahong)
About the Company
Hua Hong Semiconductor Limited ("Hua Hong Semiconductor", stock code: 1347.HK) ("the Company") is a global, leading pure-play foundry with specialty process platforms uniquely focused on embedded non-volatile memory ("eNVM"), power discrete, analog & power management, and logic & RF. Of special note is the Company's outstanding quality control system that satisfies the strict requirements of automotive chip manufacturing. The Company is part of the Huahong Group, an enterprise group whose main business is IC manufacturing, with advanced "8+12" production line technology.
The Company presently operates three 8-inch wafer fabrication facilities within the Huahong Group (HH Fab1, HH Fab2, and HH Fab3) in Jinqiao and Zhangjiang, Shanghai, with a total monthly 8-inch wafer capacity of approximately 180,000 wafers. The Company also operates a 12-inch wafer fabrication facility (HH Fab7) with the planned monthly capacity of forty thousand 12-inch wafers in Wuxi's National High-Tech Industrial Development Zone. Formal incorporation of and start of operations at HH Fab7 were achieved in 2019. In the Chinese mainland, it has become a leading 12- inch semiconductor production line devoted to specialty processes and is the first 12-inch foundry devoted to power discrete semiconductors.
For more information, please visit: www.huahonggrace.com
3
Summary of Operating Results
(Amounts in US$ thousands, except for EPS and operating data)
2Q 2020 | 2Q 2019 | 1Q 2020 | YoY | QoQ | |
(Unaudited) | (Unaudited) | (Unaudited) | Change | Change | |
Revenue | 225,350 | 230,037 | 202,854 | (2.0)% | 11.1 % |
Cost of sales | (166,840) | (158,614) | (160,132) | 5.2 % | 4.2 % |
Gross profit | 58,510 | 71,423 | 42,722 | (18.1)% | 37.0 % |
Gross margin | 26.0 % | 31.0 % | 21.1 % | (5.0) | 4.9 |
Operating expenses | (62,512) | (35,352) | (71,462) | 76.8 % | (12.5)% |
Other income net | 12,000 | 24,616 | 20,043 | (51.3)% | (40.1)% |
Profit before tax | 7,998 | 60,687 | (8,697) | (86.8)% | (192.0)% |
Income tax (expense) / credit | (6,737) | (10,793) | 11,442 | (37.6)% | (158.9)% |
Profit for the period | 1,261 | 49,894 | 2,745 | (97.5)% | (54.1)% |
Net profit margin | 0.6 % | 21.7% | 1.4 % | (21.1) | (0.8) |
Attributable to: | |||||
Owners of the parent | 17,826 | 43,360 | 20,314 | (58.9)% | (12.2)% |
Non-controlling interests | (16,565) | 6,534 | (17,569) | (353.5)% | (5.7)% |
Earnings per share attributable to | |||||
owners of the parent | |||||
Basic | 0.014 | 0.034 | 0.016 | (58.8)% | (12.5)% |
Diluted | 0.014 | 0.033 | 0.016 | (57.6)% | (12.5)% |
Wafers shipped | 523 | 489 | 463 | 7.0 % | 13.0 % |
(in thousands 8" equivalent wafers) | |||||
Capacity utilization1 | 93.4 % | 93.2 % | 82.4 % | 0.2 | 11.0 |
ROE2 | 3.2 % | 8.0 % | 3.6 % | (4.8) | (0.4) |
Second Quarter 2020
- Revenue reached US$225.4 million, 2.0% lower than the prior year, primarily due to decreased average selling price, partially offset by increased wafer shipments, but 11.1% over 1Q 2020, mainly due to increased wafer shipments.
- Cost of sales was US$166.8 million, 5.2% above 2Q 2019, mainly due to increased wafer shipments, and 4.2% over 1Q 2020, primarily due to increased wafer shipments, partially offset by lower labor expenses.
- Gross margin was 26.0%, 5.0 percentage points below 2Q 2019, mainly due to decreased average selling price and change in product mix, and 4.9 percentage points above 1Q 2020, mainly due to improved capacity utilization and lower labor costs.
- Operating expenses were US$62.5 million, 76.8% above 2Q 2019, largely due to increased development cost and depreciation expenses for Wuxi fab, and 12.5% below 1Q 2020, primarily due to lower labor and development costs.
- Other income net was US$12.0 million, 51.3% lower year over year, primarily due to (i) foreign exchange loss versus a gain in 2Q 2019 and (ii) decreased fair value gains on financial assets at fair value through profit or loss and interest income, partially offset by increased share of profit of an associate, and 40.1% lower quarter over quarter, mainly due to decreased government subsidies.
- Income tax expense was US$6.7 million, 37.6% lower than 2Q 2019, primarily due to decreased taxable profit.
- Profit for the period was US$1.3 million, compared to US$49.9 million in 2Q 2019 and US$2.7 million in 1Q 2020.
- Net profit attributable to shareholders of the parent company was US$17.8 million, compared to US$43.4 million in 2Q 2019 and US$20.3 million in 1Q 2020.
- Basic earnings per share was US$0.014, compared to US$0.034 in 2Q 2019 and US$0.016 in 1Q 2020.
- ROE (annualized) was 3.2%.
1The capacity utilization is calculated based on average monthly equivalent wafers output divided by total estimated monthly capacity. 2Profit attributable to owners of the parent / weighted average net assets attributable to owners of the parent.
4
Operating Results by Segment
(Amounts in US$ thousands, except for operating data)
2Q 2020 | 2Q 2019 | 1Q 2020 | YoY | QoQ | |
(Unaudited) | (Unaudited) | (Unaudited) | Change | Change | |
Hua Hong 8" | |||||
Revenue | 215,862 | 230,037 | 200,572 | (6.2)% | 7.6 % |
Gross profit | 59,711 | 71,423 | 42,320 | (16.4)% | 41.1 % |
Gross margin | 27.7 % | 31.0 % | 21.1 % | (3.3) | 6.6 |
Operating expenses | (26,342) | (28,002) | (29,098) | (5.9)% | (9.5)% |
Profit before tax | 41,804 | 47,353 | 27,157 | (11.7)% | 53.9 % |
EBITDA | 74,371 | 80,272 | 60,036 | (7.4)% | 23.9 % |
EBITDA margin | 34.5 % | 34.9 % | 29.9 % | (0.4) | 4.6 |
Wafers shipped | 501 | 489 | 460 | 2.5 % | 8.9 % |
(in thousands 8" wafers) | |||||
Hua Hong Wuxi | |||||
Revenue | 9,488 | - | 2,282 | N/A | 315.8 % |
Gross profit | (1,201) | N/A | 402 | N/A | (398.8)% |
Gross margin | (12.7)% | N/A | 17.6 % | N/A | (30.3) |
Operating expenses | (36,170) | (7,350) | (42,364) | 392.1 % | (14.6)% |
Profit before tax | (33,806) | 13,334 | (35,854) | (353.5)% | (5.7)% |
EBITDA | (18,493) | 13,334 | (22,800) | (238.7)% | (18.9)% |
EBITDA margin | (194.9)% | N/A | (999.1)% | N/A | 804.2 |
Wafers shipped | 22 | - | 3 | N/A | 633.3 % |
(in thousands 8"equivalent wafers) | |||||
Hua Hong 8"
- Revenue was US$215.9 million, 6.2% below 2Q 2019, primarily due to decreased average selling price, partially offset by increased wafer shipments, and 7.6% over 1Q 2020, mainly due to increased wafer shipments.
- Gross margin was 27.7%, 3.3 percentage points below 2Q 2019, mainly due to decreased average selling price and change in product mix, partially offset by improved capacity utilization, and 6.6 percentage points above 1Q 2020, mainly due to improved capacity utilization and lower labor cost.
- Operating expenses were US$26.3 million, 5.9% below 2Q 2019, primarily due to RMB depreciation and decreased development expenses, and 9.5% lower than 1Q 2020, primarily due to lower labor and development costs.
- Profit before tax was US$41.8 million, compared to US$47.4 million in 2Q 2019 and US$27.2 million in 1Q 2020.
Hua Hong Wuxi
- Revenue was US$9.5 million, 4 times more than the prior quarter.
- Operating expenses were US$36.2 million, compared to US$7.4 million in 2Q 2019, largely due to increased development and depreciation expenses, and $42.4 million in 1Q 2020, mainly due to decreased development and labor expenses.
- Profit before tax was minus US$33.8 million.
- EBITDA was minus US$18.5 million, US$4.3 million more favorable than 1Q 2020.
5
Analysis of Revenue | ||||||
Revenue by | 2Q 2020 | 2Q 2020 | 2Q 2019 | 2Q 2019 | YoY | YoY |
service type | US$000 | % | US$000 | % | Change | Change |
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | US$000 | % | |
Wafers | 216,291 | 96.0% | 225,012 | 97.8% | (8,721) | (3.9)% |
Others | 9,059 | 4.0% | 5,025 | 2.2% | 4,034 | 80.3 % |
Total revenue | 225,350 | 100.0% | 230,037 | 100.0% | (4,687) | (2.0)% |
- 96.0% of total revenue was derived from the sale of semiconductor wafers in 2Q 2020.
Analysis of Revenue | ||||||
Revenue by | 2Q 2020 | 2Q 2020 | 2Q 2019 | 2Q 2019 | YoY | YoY |
wafer size | US$000 | % | US$000 | % | Change | Change |
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | US$000 | % | |
8" wafers | 215,862 | 95.8% | 230,037 | 100.0% | (14,175) | (6.2)% |
12" wafers | 9,488 | 4.2% | - | - | 9,488 | N/A |
Total revenue | 225,350 | 100.0% | 230,037 | 100.0% | (4,687) | (2.0)% |
- Revenues for 8" wafers and 12" wafers were US$215.9 million and US$9.5 million, respectively, in 2Q 2020.
6
Analysis of Revenue
Revenue by | 2Q 2020 | 2Q 2020 | 2Q 2019 | 2Q 2019 | YoY | YoY |
geography | US$000 | % | US$000 | % | Change | Change |
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | US$000 | % | |
China3 | 137,558 | 61.0% | 127,335 | 55.4% | 10,223 | 8.0 % |
United States | 33,758 | 15.0% | 42,042 | 18.3% | (8,284) | (19.7)% |
Asia4 | 28,560 | 12.7% | 28,041 | 12.2% | 519 | 1.9 % |
Europe | 19,089 | 8.5% | 18,246 | 7.9% | 843 | 4.6 % |
Japan5 | 6,385 | 2.8% | 14,373 | 6.2% | (7,988) | (55.6)% |
Total revenue | 225,350 | 100.0% | 230,037 | 100.0% | (4,687) | (2.0)% |
- Revenue from China was US$137.6 million, contributing 61.0% of total revenue and an increase of 8.0% compared to 2Q 2019, mainly driven by increased demand for logic products.
- Revenue from United States was US$33.8 million, a decrease of 19.7% compared to 2Q 2019, mainly due to decreased demand for general MOSFET and super junction products, partially offset by increased demand for MCU products.
- Revenue from Asia was US$28.6 million, an increase of 1.9% compared to 2Q 2019, chiefly driven by increased demand for MCU products, partially offset by decreased demand for general MOSFET and logic products.
- Revenue from Europe was US$19.1 million, an increase of 4.6% compared to 2Q 2019, chiefly driven by increased demand for smart card ICs.
- Revenue from Japan was US$6.4 million, a decrease of 55.6% compared to 2Q 2019, mainly due to decreased demand for logic and MCU products.
3Includes Hong Kong.
4Excludes China and Japan.
5Includes a major customer in Japan that was acquired by a U.S. headquartered company in 2013.
7
Analysis of Revenue
Revenue by | 2Q 2020 | 2Q 2020 | 2Q 2019 | 2Q 2019 | YoY | YoY |
technology | US$000 | % | US$000 | % | Change | Change |
platform | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | US$000 | % |
eNVM | 76,866 | 34.1% | 79,583 | 34.6% | (2,717) | (3.4)% |
Discrete | 86,779 | 38.5% | 92,487 | 40.2% | (5,708) | (6.2)% |
Analog & PM | 31,555 | 14.0% | 33,371 | 14.5% | (1,816) | (5.4)% |
Logic & RF | 26,712 | 11.9% | 21,606 | 9.4% | 5,106 | 23.6 % |
Standalone NVM | 3,155 | 1.4% | 2,709 | 1.2% | 446 | 16.5 % |
Others | 283 | 0.1% | 281 | 0.1% | 2 | 0.7 % |
Total revenue | 225,350 | 100.0% | 230,037 | 100.0% | (4,687) | (2.0)% |
- Revenue from eNVM was US$76.9 million, a decrease of 3.4% compared to 2Q 2019, primarily due to decreased demand for smart card ICs, partially offset by increased demand for MCU products.
- Revenue from discrete was US$86.8 million, a decrease of 6.2% compared to 2Q 2019, mainly due to decreased demand for super junction, partially offset by increased demand for IGBT products.
- Revenue from analog & power management was US$31.6 million, a decrease of 5.4% compared to 2Q 2019, mainly due to decreased demand for LED lighting and analog products, partially offset by increased demand for other PMIC products.
- Revenue from logic & RF was US$26.7 million, an increase of 23.6% compared to 2Q 2019, largely driven by increased demand for logic products, partially offset by decreased demand for RF products.
- Revenue from Standalone NVM was US$3.2 million, an increase of 16.5% compared to 2Q 2019, primarily due to increased demand for EEPROM products.
8
Analysis of Revenue
Revenue by | 2Q 2020 | 2Q 2020 | 2Q 2019 | 2Q 2019 | YoY | YoY | |
process | US$000 | % | US$000 | % | Change | Change | |
technology node | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | US$000 | % | |
≤0.13µm | 76,322 | 33.9% | 73,783 | 32.1% | 2,539 | 3.4 % | |
0.15µm & 0.18µm | 33,971 | 15.1% | 25,155 | 10.9% | 8,816 | 35.0 % | |
0.25µm | 4,009 | 1.8% | 2,133 | 0.9% | 1,876 | 88.0 % | |
≥0.35µm | 111,048 | 49.2% | 128,966 | 56.1% | (17,918) | (13.9)% | |
Total revenue | 225,350 | 100.0% | 230,037 | 100.0% | (4,687) | (2.0)% | |
- Revenue from 0.13µm and lower technology nodes was US$76.3 million, an increase of 3.4% versus 2Q 2019, chiefly driven by increased demand for MCU and logic products, partially offset by smart card ICs.
- Revenue from the 0.15µm & 0.18µm technology nodes was US$34.0 million, an increase of 35.0% from 2Q 2019, mainly driven by increased demand for MCU, analog and logic products.
- Revenue from the 0.25µm technology node was US$4.0 million, an increase of 88.0% from 2Q 2019, primarily driven by increased demand for logic products.
- Revenue from 0.35µm and above technology nodes was US$111.0 million, a decrease of 13.9% compared to 2Q 2019, primarily due to decreased demand for super junction, smart card ICs and analog products.
Analysis of Revenue
Revenue by | 2Q 2020 | 2Q 2020 | 2Q 2019 | 2Q 2019 | YoY | YoY | ||
end market | US$000 | % | US$000 | % | Change | Change | ||
distribution | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | US$000 | % | ||
Consumer electronics | 133,727 | 59.3% | 147,160 | 64.0% | (13,433) | (9.1)% | ||
Industrial & automotive 56,046 | 24.9% | 44,285 | 19.3% | 11,761 | 26.6 % | |||
Communications | 27,455 | 12.2% | 28,134 | 12.2% | (679) | (2.4)% | ||
Computing | 8,122 | 3.6% | 10,458 | 4.5% | (2,336) | (22.3)% | ||
Total revenue | 225,350 | 100.0% | 230,037 | 100.0% | (4,687) | (2.0)% | ||
- Revenue from consumer electronics, our largest end market segment, contributed US$133.7 million, reaching 59.3% of total revenue, a decrease of 9.1% compared to 2Q 2019, mainly due to decreased demand for smart card ICs.
- Revenue from industrial & automotive was US$56.0 million, an increase of 26.6% over 2Q 2019, primarily driven by an increased demand for MCU, analog, logic, smart card ICs and IGBT, partially offset by super junction products.
- Revenue from communications was US$27.5 million, a decrease of 2.4% compared to 2Q 2019, mainly due to decreased demand for smart card ICs and general MOSFET products, partially offset by increased demand for logic products.
- Revenue from computing was US$8.1 million, a decrease of 22.3% compared to 2Q 2019, mainly due to decreased demand for general MOSFET products.
9
Capacity6 and Capacity Utilization
Fab (in thousands wafers | 2Q 2020 | 2Q 2019 | 1Q 2020 |
per month) | (Unaudited) | (Unaudited) | (Unaudited) |
Fab 1 (200mm) | 65 | 65 | 65 |
Fab 2 (200mm) | 60 | 60 | 60 |
Fab 3 (200mm) | 53 | 50 | 53 |
Fab 7 (300mm) | 10 | - | 10 |
Total 8" equivalent wafers | 201 | 175 | 201 |
Capacity utilization (200mm) | 100.4% | 93.2% | 91.9% |
Capacity utilization (300mm) | 38.3% | - | 6.9% |
Overall capacity utilization | 93.4% | 93.2% | 82.4% |
- Monthly capacity was 201,000 8-inch equivalent wafers at the end of 2Q 2020. Overall capacity utilization was 93.4% in 2Q 2020, 11.0 percentage points above 1Q 2020.
Wafer Shipments
in thousands 8" | 2Q 2020 | 2Q 2019 | 1Q 2020 | YoY | QoQ | |
equivalent wafers | (Unaudited) | (Unaudited) | (Unaudited) | Change | Change | |
Wafer shipments | 523 | 489 | 463 | 7.0 % | 13.0 % | |
- Wafer shipments were 523,000, an increase of 7.0% year over year, and 13.0% quarter over quarter.
Operating Expenses Analysis
Amounts in US$ thousands | 2Q 2020 | 2Q 2019 | 1Q 2020 | YoY | QoQ | |
(Unaudited) | (Unaudited) | (Unaudited) | Change | Change | ||
Selling and distribution expenses | 1,925 | 1,979 | 2,301 | (2.7)% | (16.3)% | |
Administrative expenses7 | 60,587 | 33,373 | 69,161 | 81.5 % | (12.4)% | |
Operating expenses | 62,512 | 35,352 | 71,462 | 76.8 % | (12.5)% | |
- Operating expenses were US$62.5 million, 76.8% above 2Q 2019, largely due to increased development and depreciation expenses for Wuxi fab, and 12.5% below 1Q 2020, primarily due to lower labor and development costs.
6 Wafers per month at the end of the period, calculated on a 30-day basis for comparison purposes. 7Administrative expenses include government grants recognized as an offset item.
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Other Income Net Analysis | ||||||
Amounts in US$ thousands | 2Q 2020 | 2Q 2019 | 1Q 2020 | YoY | QoQ | |
(Unaudited) | (Unaudited) | (Unaudited) | Change | Change | ||
Rental income | 3,071 | 3,225 | 3,098 | (4.8)% | (0.9)% | |
Interest income | 2,960 | 5,661 | 2,710 | (47.7)% | 9.2 % | |
Fair value gains on financial assets | 1,658 | 7,627 | 3,454 | (78.3)% | (52.0)% | |
at fair value through profit or loss | ||||||
Foreign exchange (loss) / gain | (361) | 7,589 | 1,352 | (104.8)% | (126.7)% | |
Share of profit of an associate | 4,362 | 627 | 2,896 | 595.7 % | 50.6 % | |
Finance costs | (301) | (309) | (317) | (2.6)% | (5.0)% | |
Government subsidies | 453 | 82 | 6,607 | 452.4 % | (93.1)% | |
Others | 158 | 114 | 243 | 38.6 % | (35.0)% | |
Other income net | 12,000 | 24,616 | 20,043 | (51.3)% | (40.1)% | |
- Other income net was US$12.0 million, 51.3% lower year over year, primarily due to (i) foreign exchange loss versus a gain in 2Q 2019 and (ii) decreased fair value gains on financial assets at fair value through profit or loss and interest income, partially offset by increased share of profit of an associate, and 40.1% lower quarter over quarter, mainly due to decreased government subsidies.
Cash Flow Analysis
Amounts in US$ thousands | 2Q 2020 | 2Q 2019 | 1Q 2020 | YoY | QoQ |
(Unaudited) (Unaudited) | (Unaudited) | Change | Change | ||
Net cash flows generated from / | 101,847 | 20,659 | (6,639) | 393.0 % | (1,634.1)% |
(used in) operating activities | |||||
Net cash flows generated from / | 81,493 | (280,795) | 51,368 | (129.0)% | 58.6 % |
(used in) investing activities | |||||
Net cash flows (used in) / generated | (3,230) | (52,974) | 1,662 | (93.9)% | (294.3)% |
from financing activities | |||||
Effect of exchange rate changes | 545 | (7,471) | (4,375) | (107.3)% | (112.5)% |
Net change in cash | 180,655 | (320,581) | 42,016 | (156.4)% | 330.0 % |
- Net cash flows generated from operating activities were US$101.8 million, compared to US$20.7 million in 2Q 2019, largely due to receipts of VAT tax return.
- Net cash flows generated from investing activities were US$81.5 million, including (i) payout of US$187.0 million in investment in financial assets at fair value through profit or loss, (ii) payout of US$70.0 million in investment in time deposit, and (iii) US$2.6 million of interest income, partially offset by US$178.1 million of investment in fixed assets and intangible assets.
- Net cash flows used in financing activities were US$3.2 million, including (i) US$2.1 million of repayments of bank borrowings, (ii) US$1.1 million of lease payments, and (iii) US$0.1 million of interest expenses for bank borrowing, partially offset by US$0.1 million proceeds from share option exercise.
11
Capital Structure
Amounts in US$ thousands | 30-Jun-2020 | 31-Mar-2020 |
(Unaudited) | (Unaudited) | |
Total assets | 3,575,890 | 3,540,298 |
Total liabilities | 526,107 | 498,079 |
Total equity | 3,049,783 | 3,042,219 |
Debt ratio8 | 14.7% | 14.1% |
Capital Expenditures
Amounts in US$ thousands | 2Q 2020 | 1Q 2020 |
(Unaudited) | (Unaudited) | |
Hua Hong 8" | 33,272 | 31,409 |
Hua Hong Wuxi | 144,801 | 169,141 |
Total | 178,073 | 200,550 |
- Capital expenditures were US$178.1 million in 2Q 2020, including US$144.8 million for Wuxi fab.
8 Debt ratio is calculated based on total liabilities / total assets.
12
Liquidity
Amounts in US$ thousands | 30-Jun-2020 | 31-Mar-2020 |
(Unaudited) | (Unaudited) | |
Inventories | 176,856 | 154,736 |
Trade and notes receivables | 135,518 | 156,223 |
Prepayments, deposits and other receivables | 66,174 | 133,057 |
Due from related parties | 11,588 | 10,593 |
Financial assets at fair value through profit or loss | 84,759 | 270,167 |
Restricted and time deposits | 766 | 70,765 |
Cash and cash equivalents | 698,957 | 518,302 |
Total current assets | 1,174,618 | 1,313,843 |
Trade payables | 92,607 | 95,510 |
Other payables, advances from customers and accruals | 318,489 | 268,710 |
Interest-bearing bank borrowings | 4,238 | 4,234 |
Lease liabilities | 3,757 | 2,977 |
Government grants | 40,105 | 40,017 |
Due to related parties | 13,467 | 16,531 |
Income tax payables | 14,292 | 31,431 |
Total current liabilities | 486,955 | 459,410 |
Net working capital | 687,663 | 854,433 |
Quick ratio | 2.0x | 2.5x |
Current ratio | 2.4x | 2.9x |
Trade and notes receivables turnover days | 59 | 73 |
Inventories turnover days | 89 | 83 |
- Inventories increased from US$154.7 million on 31 March 2020 to US$176.9 million on 30 June 2020, primarily due to increased raw materials and finished goods.
- Trade and notes receivables decreased from US$156.2 million on 31 March 2020 to US$135.5 million on 30 June 2020, mainly due to decreased revenue in 1Q 2020 as a result of COVID-19.
- Prepayments, deposits and other receivables decreased from US$133.1 million on 31 March 2020 to US$66.2 million on 30 June 2020, primarily due to receipts of VAT tax return.
- Financial assets at fair value through profit or loss decreased from US$270.2 million on 31 March 2020 to US$84.8 million on 30 June 2020, due to payout from investment in financial products.
- Restricted and time deposits decreased from US$70.8 million on 31 March 2020 to US$0.8 million on 30 June 2020, due to payout from investment in time deposits.
- Other payables, advances from customers and accruals increased from US$268.7 million on 31 March 2020 to US$318.5 million on 30 June 2020, primarily due to increased payables for capital expenditures.
- Income tax payables decreased from US$31.4 million on 31 March 2020 to US$14.3 million on 30 June 2020, primarily due to a payment of income tax for 2019.
- On 30 June 2020, net working capital was US$687.7 million and the current ratio was 2.4.
- Trade and notes receivables turnover days were 59.
- Inventories turnover days were 89.
Please visit Company's website at www.huahonggrace.com
for further details regarding recent announcements.
13
Hua Hong Semiconductor Limited
Condensed Consolidated Statements of Profit or Loss
(In US$ Thousands Except Share Data)
For the Three Months Ended | |||
30-Jun-202030-Jun-201931-Mar-2020 | |||
(Unaudited) | (Unaudited) | (Unaudited) | |
Revenue | 225,350 | 230,037 | 202,854 |
Cost of sales | (166,840) | (158,614) | (160,132) |
Gross profit | 58,510 | 71,423 | 42,722 |
Other income and gains | 8,303 | 24,302 | 17,464 |
Selling and distribution expenses | (1,925) | (1,979) | (2,301) |
Administrative expenses | (60,587) | (33,373) | (69,161) |
Other expenses | (364) | (4) | - |
Finance costs | (301) | (309) | (317) |
Share of profit of an associate | 4,362 | 627 | 2,896 |
Profit before tax | 7,998 | 60,687 | (8,697) |
Income tax (expense) /credit | (6,737) | (10,793) | 11,442 |
Profit for the period | 1,261 | 49,894 | 2,745 |
Attributable to: | |||
Owners of the parent | 17,826 | 43,360 | 20,314 |
Non-controlling interests | (16,565) | 6,534 | (17,569) |
Earnings per share attributable to owners of parent | |||
Basic | 0.014 | 0.034 | 0.016 |
Diluted | 0.014 | 0.033 | 0.016 |
Shares used in calculating basic earnings per share | 1,291,439,564 | 1,285,237,562 | 1,290,612,948 |
attributable to owners of parent | |||
Shares used in calculating diluted earnings per share | 1,300,881,564 | 1,299,346,562 | 1,303,317,948 |
attributable to owners of parent | |||
14
Hua Hong Semiconductor Limited
Condensed Consolidated Statements of Financial Position (In US$ Thousands)
As of | |||
30-Jun-202031-Mar-202030-Jun-2019 | |||
(Unaudited) | (Unaudited) | (Unaudited) | |
ASSETS | |||
NON-CURRENT ASSETS | |||
Property, plant and equipment | 1,790,860 | 1,659,799 | 1,037,724 |
Right-of-use assets | 75,810 | 74,809 | 75,484 |
Investment property | 166,154 | 166,023 | 170,939 |
Intangible assets | 32,201 | 10,766 | 12,198 |
Investment in an associate | 79,335 | 74,898 | 64,900 |
Equity instruments designated at fair value through | 204,658 | 204,497 | 208,008 |
other comprehensive income | |||
Long term prepayment | 42,100 | 14,721 | 90,270 |
Due from related parties | 1,994 | 13,629 | 6,908 |
Deferred tax assets | 8,160 | 7,313 | 7,429 |
Total non-current assets | 2,401,272 | 2,226,455 | 1,673,860 |
CURRENT ASSETS | |||
Inventories | 176,856 | 154,736 | 139,128 |
Trade and notes receivables | 135,518 | 156,223 | 147,771 |
Prepayments, deposits and other receivables | 66,174 | 133,057 | 72,067 |
Due from related parties | 11,588 | 10,593 | 4,366 |
Financial assets at fair value through profit or loss | 84,759 | 270,167 | 658,306 |
Restricted and time deposits | 766 | 70,765 | 14,724 |
Cash and cash equivalents | 698,957 | 518,302 | 834,678 |
Total current assets | 1,174,618 | 1,313,843 | 1,871,040 |
CURRENT LIABILITIES | |||
Trade payables | 92,607 | 95,510 | 76,966 |
Other payables, advanced from customers and accruals | 318,489 | 268,710 | 267,047 |
Interest-bearing bank borrowings | 4,238 | 4,234 | 4,364 |
Lease liabilities | 3,757 | 2,977 | 1,381 |
Government grants | 40,105 | 40,017 | 55,335 |
Due to related parties | 13,467 | 16,531 | 12,688 |
Income tax payable | 14,292 | 31,431 | 18,908 |
Total current liabilities | 486,955 | 459,410 | 436,689 |
NET CURRENT ASSETS | 687,663 | 854,433 | 1,434,351 |
TOTAL ASSETS LESS CURRENT LIABILITIES | 3,088,935 | 3,080,888 | 3,108,211 |
Non-current liabilities | |||
Interest-bearing bank borrowings | 19,069 | 21,171 | 24,001 |
Lease liabilities | 16,889 | 15,837 | 16,653 |
Deferred tax liabilities | 3,194 | 1,661 | 8,203 |
Total non-current liabilities | 39,152 | 38,669 | 48,857 |
Net assets | 3,049,783 | 3,042,219 | 3,059,354 |
Equity and liabilities capital and reserves | |||
Share capital | 1,971,748 | 1,968,961 | 1,961,742 |
Reserves | 286,489 | 265,907 | 234,763 |
Equity attributable to the owners of the company | 2,258,237 | 2,234,868 | 2,196,505 |
Non-controlling interests | 791,546 | 807,351 | 862,849 |
Total equity | 3,049,783 | 3,042,219 | 3,059,354 |
15 |
Hua Hong Semiconductor Limited
Condensed Consolidated Statement of Cash Flows (In US$ Thousands)
For the Three Months Ended | |||
30-Jun-202030-Jun-201931-Mar-2020 | |||
(Unaudited) | (Unaudited) | (Unaudited) | |
Cash flows from operating activities: | |||
Profit / (loss) before tax | 7,998 | 60,687 | (8,697) |
Depreciation and amortization | 47,579 | 32,610 | 45,616 |
Share of profit of an associate | (4,362) | (627) | (2,896) |
Changes in working capital and others | 50,632 | (72,011) | (40,662) |
Net cash flows generated from / (used in) | 101,847 | 20,659 | (6,639) |
operating activities | |||
Cash flows from investing activities: | |||
Payments for property, plant and equipment and | (178,073) | (223,053) | (200,550) |
intangible assets | |||
Other cash flow generated from / (used in) | 259,566 | (57,742) | 251,918 |
investing activities | |||
Net cash flows generated from / (used in) | 81,493 | (280,795) | 51,368 |
investing activities | |||
Cash flows from financing activities: | |||
Proceeds from issue of shares | 17 | 537 | 3,817 |
Dividends paid to shareholders | - | (37,042) | - |
Increase in restricted deposits | - | (13,943) | - |
Repayment of bank borrowings | (2,119) | (2,182) | - |
Payment of lease liabilities | (1,050) | (249) | (2,078) |
Interest paid | (78) | (95) | (77) |
Net cash flows (used in) / generated from | (3,230) | (52,974) | 1,662 |
financing activities | |||
Net increase / (decrease) in cash and cash equivalents | 180,110 | (313,110) | 46,391 |
Effects of exchange rate changes | 545 | (7,471) | (4,375) |
Cash and cash equivalents, beginning of period | 518,302 | 1,155,259 | 476,286 |
Cash and cash equivalents, ending of period | 698,957 | 834,678 | 518,302 |
As of the date of this announcement, the directors of the Company are:
Executive Directors
Suxin Zhang (Chairman)
Junjun Tang (President)
Non-Executive Directors
Yang Du
Takayuki Morita
Jing Wang
Jun Ye
Independent Non-Executive Directors
Stephen Tso Tung Chang
Kwai Huen Wong, JP
Long Fei Ye
By order of the Board
Hua Hong Semiconductor Limited
Mr. Suxin Zhang
Chairman and Executive Director
Hong Kong SAR, PRC
August 11, 2020
16
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Hua Hong Semiconductor Ltd. published this content on 11 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 11 August 2020 09:18:04 UTC