Assessing Semiconductor Manufacturing International (SEHK:981) Valuation After Strong One Year Shareholder Returns

Semiconductor Manufacturing International (SEHK:981) has drawn fresh attention after recent share price moves, with the stock showing a mix of gains over the past month and declines over the past 3 months.

See our latest analysis for Semiconductor Manufacturing International.

At a current share price of HK$76.5, Semiconductor Manufacturing International has seen strong short term momentum, with a 7 day share price return of 9.99% and a 30 day share price return of 9.68%, while the 90 day share price return of 15.98% decline contrasts sharply with a very large 1 year total shareholder return of 158.01%. This hints that recent weakness may reflect changing risk appetite after an extended period of strong gains.

If this kind of move has your attention, it could be a useful moment to broaden your watchlist with high growth tech and AI stocks that are also seeing active interest from investors.

So with the share price close to analyst targets and a very large 1 year return already on the table, investors may need to consider whether Semiconductor Manufacturing International is still undervalued or if the market is already pricing in future growth.

Most Popular Narrative: 6.8% Overvalued

Compared with the last close at HK$76.50, the most followed narrative points to a fair value of HK$71.60, putting today’s price slightly above that mark and framing a valuation built around steady revenue growth and margins.

Semiconductor Manufacturing International Future Earnings and Revenue Growth Assumptions. How have these above catalysts been quantified?

• Analysts are assuming Semiconductor Manufacturing International's revenue will grow by 12.7% annually over the next 3 years.

• Analysts assume that profit margins will increase from 6.5% today to 11.6% in 3 years time.

Read the complete narrative.

Curious what happens when you layer that revenue path with higher margins and a richer P/E than many chip peers? The full narrative spells out the earnings curve, the valuation multiple and the discount rate that need to line up for HK$71.60 to make sense.

Result: Fair Value of $71.60 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, that earnings curve only holds if pricing pressure eases and heavy capital spending does not leave SMIC with overcapacity and weaker long term profitability.

Find out about the key risks to this Semiconductor Manufacturing International narrative.

Build Your Own Semiconductor Manufacturing International Narrative

If you think the assumptions here miss something, or you prefer to test your own inputs, you can build a fresh Semiconductor Manufacturing International view in just a few minutes, starting with Do it your way.

A great starting point for your Semiconductor Manufacturing International research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

Looking for more investment ideas?

If SMIC has you thinking more carefully about your portfolio, this is the moment to widen your funnel and stress test fresh ideas before the crowd moves on.

• Hunt for potential value by scanning these 868 undervalued stocks based on cash flows that line up with your expectations on cash flows and pricing.
• Target growth themes by checking out these 25 AI penny stocks that are tightly linked to long term AI adoption stories.
• Strengthen your income stream by reviewing these 14 dividend stocks with yields > 3% that could complement higher growth positions with steadier cash returns.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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