Hua Hong (1347.HK): 4Q26 guidance and 3Q26 results beat; Strong demand with Huali in scope of consolidation; Buy

Goldman Sachs reiterates Buy on Hua Hong (1347.HK) and lowers its 12-month target price to HK$280 from HK$289, based on 63.0x 2030E P/E discounted back to 2027E with an unchanged COE of 9.3%. Management guides 4Q26 revenue to US$1,080-1,090mn, up 9-10% QoQ, with gross margin of 25-26%. The revenue guidance midpoint is 19% and 13% above GSe and Bloomberg consensus, while the GM midpoint of 25.5% is 9.3ppts and 8.3ppts higher. In 3Q26, revenue reached US$987mn, 24% and 25% above GSe and consensus, with GM at 24.6% versus 16.2% and 17.2% expected; net income was US$123.4mn, 81% and 128% above GSe and consensus. The beats mainly reflect Huali Micro consolidation rather than equivalent improvement in the existing business; excluding Huali Micro, revenue was US$803.4mn with GM of 19.9%, still above prior guidance. GS raises 2026E-29E net income estimates by 66%, 87%, 78% and 50%, citing China AI spending, customers' China-for-China strategy, generative AI demand for NVM and PMIC products, an