SMIC (0981.HK) Rides 36% Revenue Growth and 258% EPS Surge as Foundry Demand Levers Improve

Semiconductor Manufacturing International Corp is a Hong Kong-listed semiconductor foundry headquartered in Shanghai that manufactures, tests, and sells integrated circuit wafers and related semiconductor products. Its operations span China, the United States, and Eurasia, alongside foundry, technology, design/IP support, photomask, and other technical services. The name matters because SMIC is showing strong operating momentum, with quarterly revenue up 36.1% year over year and quarterly earnings up 258.7% year over year, suggesting demand and leverage are still flowing through the model. TTM profitability is solid for a capital-intensive foundry, with gross margin of 21.8%, operating margin of 17.1%, and net margin of 10.0%, although return metrics remain modest at 1.1% ROA and 4.2% ROE. The stock looks expensive on trailing numbers at 42.1x P/E and 35.4x P/S, but forward P/E falls to 23.8x and PEG is 0.78, indicating the valuation hinges on continued EPS growth. Balance sheet leverage is elevated but manageable, with net debt of 6.45bn against 6.25bn of cash and book value of 23.05 per share, which matters given ongoing fab investment needs.