By Sherry Qin

Semiconductor Manufacturing International Corp. is scheduled to report third-quarter results on Thursday. Here is what you need to know:

NET PROFIT: China's largest contract chip maker is expected to post third-quarter net profit of $183.5 million, according to the consensus estimate of 10 analysts polled by FactSet. That would be a 96% jump from the same period last year, when the chip maker suffered from weak demand amid a global postpandemic inventory glut.

REVENUE: Revenue is estimated at $2.17 billion, up 34% from a year ago, according to FactSet. That would be in line with SMIC's guidance of 13%-15% sequential growth from $1.90 billion in the second quarter.

SMIC's Hong Kong-listed shares rose 22% in the third quarter, with most of the gains recorded in late September after China's aggressive stimulus measures. However, analysts think the rally in SMIC and other Chinese semiconductor stocks is driven by fund flows and better investor sentiment, rather than improved fundamentals.

WHAT TO WATCH:

--OUTLOOK: Investors will pay attention to SMIC's guidance for the current quarter as management was conservative about the final three months of the year during the earnings call in August. Analysts noted that the fourth quarter is traditionally a low season and expect the foundry sector to continue to recover in 2025.

--OVERSUPPLY CONCERNS: SMIC likely still faces oversupply concerns despite a short-term demand recovery driven by advance orders, Jefferies analysts wrote in a recent note. Long-term oversupply concerns could weigh on the company's average selling price and hurt gross margin and net profit in the years ahead along with heavy depreciation, they said.

Write to Sherry Qin at sherry.qin@wsj.com

(END) Dow Jones Newswires

November 05, 2024 21:38 ET (02:38 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.