SMIC's Q3 Outlook Remains Bright, but Risks Loom in Q4 and Beyond; FVE Unchanged at HKD 21

We maintain our HKD 21 fair value estimate for Semiconductor Manufacturing International Corp. after adjusting our 2022 and 2023 revenue forecasts and long-term capital expenditure projections but leaving other estimates unchanged. We are moving our Morningstar Uncertainty Rating to High from Very High owing to more visibility on possible restrictions on buying equipment from U.S. suppliers. The stock is modestly undervalued, in our view, as it is trading just below book value. We believe a rebound in consumer electronics demand and more information on advanced manufacturing (14 nanometers and below) can move the stock higher.