A Fresh Look at SMIC (SEHK:981) Valuation Following Higher Sales and Upbeat Q4 Guidance

Semiconductor Manufacturing International (SEHK:981) just released its latest earnings, showing increased sales and net income for the nine months ending September 30, 2025. The company also projected stable or slightly higher revenue for the upcoming quarter.

See our latest analysis for Semiconductor Manufacturing International.

On the heels of stronger sales and upbeat guidance, Semiconductor Manufacturing International’s 1-year total shareholder return stands out at 167.9%, showing remarkable long-term momentum even as the share price has pulled back 16.9% over the last month. With a 137% year-to-date share price return and a five-year total shareholder return above 200%, investors clearly see both growth potential and evolving risks that factor into the current valuation.

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With such rapid gains, investors are left to ponder whether Semiconductor Manufacturing International shares offer value at current levels, or if elevated expectations have already been factored in for the next stage of growth.

Most Popular Narrative: 0.8% Undervalued

With the last close at HK$68.85 and a narrative fair value pegged at HK$69.38, the consensus view signals pricing almost matches future expectations. The stage is set for assumptions about continued growth and operational leverage, which is fueling a debate about whether the current rally has run its course or still has room to run.

Continued investment in customized process technology and domestic innovation aligns SMIC with national policy and strengthens self-sufficiency, which may yield long-term cost efficiencies by lowering dependence on foreign technology and improving gross margins.

Read the complete narrative.

Curious which bold forecasts underwrite this valuation? The narrative hinges on outsized improvements in the business model, such as expansion, efficiency, and a profitability jump. Behind the headline, one crucial financial lever explains why the fair value aligns so closely with the market price. Discover the full set of underlying projections that could change investor expectations for years to come.

Result: Fair Value of $69.38 (UNDERVALUED)

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

However, ongoing pricing pressures and a heavy reliance on domestic demand could quickly change the company’s outlook if market conditions shift unexpectedly.

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

Another View: High Valuation Ratios Raise Questions

While narrative-driven fair value suggests SMIC is undervalued, current valuation ratios tell a more expensive story. The price-to-earnings ratio is 114.2x, which is well above both the industry average of 34x and peers at 25.4x. It is also significantly higher than the fair ratio of 44.6x. This wide gap hints at substantial valuation risk if market sentiment shifts or the company misses aggressive growth forecasts. Could this premium price hold up if the growth story stalls?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Semiconductor Manufacturing International Narrative

If you want to reach your own conclusions or dig deeper into the numbers, you can analyze the data for yourself and craft a unique perspective in just a few minutes. Do it your way

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

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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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