Smic's recent share price rise, mainly with LFoundry Europe and Marsica agreement, will be paid 49 million euros for the LFoundry Europe and Marsica holdings of Italian IC foundries, after the completion of the acquisition, smic, LFoundry Europe and MarsiLFoundry 70% stake. The acquisition will be completed this month, can buy merger capacity, expand the scale of the group, also can achieve complementary technology, and increase the market opportunity, enable the company to expand its product auto and industrial fields; And expand its business in the European market and improve the comprehensive production capacity of about 13%. LFoundry current capacity utilization rate of 60%, over the past five quarters and smic has achieved 99% or more of capacity utilization. This acquisition is smic an important step in the global strategy.
Group, mainly engaged in computer aided design, manufacturing, testing, packaging and sale integrated circuits and other semiconductor services, design and manufacture of semiconductor mask at the same time. Believe that the group will be announced in mid-august stunning performance in the second quarter of 2016, this may be in the short term its share price rise of the catalyst.
Review in the first quarter of 2016, smic (00981 HK) took in $634.3 million high income, the quarterly growth of 4.0%, a better management is expected to grow by 1% to 1%. Due to the strong customer orders, wafer production according to the quarter increased by 5.8%, but its quarterly average selling prices fell 1.7%. The quarterly expand by 6.5% to 302625 pieces of monthly production capacity 8 inch wafer equivalent. Gross margins fell from 28.5% in the fourth quarter of 2015 to 24.2% in the first quarter of 2016, but in line with management expectations of 22% 25%.
In the first quarter of 2016 gross profit margin is low because of Beijing's most holdings in December 2015 to enter mass production factory, so as to increase in the cost of production. Other employees for accrued bonuses and majority holding in Beijing before operation of the factory management cost is reduced, its operating costs not expected a 33.8% drop in quarterly, from $132.3 million in the fourth quarter of 2015 to $2016 in the first quarter of 2016. As a result, the company net profit according to the quarter rose 59.1% to $61.4 million.
As of March 31, 2016, the company's book value per share of hk $0.7, while net debt to equity ratio of 12.4%, belong to a lower level. Smic's shares under 0.60 yuan (00981 HK) form a double-dip, investors can at 0.63 yuan to buy, target 0.70 yuan.
