To The Moon

$ASML Holding NV(ASML)$

Before the release of result I posted a article on it and was really looking forward to it.

With the result released, would like to do a summary on it, and also share my thoughts and strategy.

High level summary, ( take note value are in Euro) Dutch Company.

Q4 net sales of €5.0 billion, gross margin of 54.2%, net income of €1.8 billion.

54% gross margin is impressive and good business to me.

Q4 net bookings of €7.1 billion. This sort of secure the next 1-2 years.

Overall 2021 net sales of €18.6 billion, gross margin also around 52%, with net income of €5.9 billion

Outlook, ASML expects Q1 2022 net sales between €3.3 billion and €3.5 billion and a gross margin of around 49%

Approximately €2 billion worth of sales that are expected to ship in the first quarter are not included in this number, and will be recognized in subsequent quarters after formal customer acceptance tests are completed in the field. This is a point to note.

ASML expects 2022 net sales to grow around 20% compared to 2021. The expected impact of the fire in part of a building at our Berlin site is included in this. Based on current assessment, this fire is without significant impact on ASML system output for 2022. Thats good news.

ASML intends to declare a total dividend over 2021 of €5.50 per ordinary share (100% increase compared to previous year). Shows that they are strong in cash flow.

Some key points that the CEO presented are as follows

1) Fourth-quarter net sales came in at €5.0 billion which is within guidance. The gross margin of 54.2%, is higher than guided due to strong Installed Base revenue. Fourth-quarter net bookings came in at €7.1 billion, including €2.6 billion from 0.33 NA and 0.55 NA EUV systems.

2) The total net sales for the year was €18.6 billion, including €6.3 billion from 42 EUV systems. For ASML, 2021 was a strong growth year in a dynamic environment.

3) ASML experience higher demand for systems than their production capacity can accommodate. Very strong demand in end markets puts pressure on wafer manufacturer for more wafer output. In order to support the needs, ASML also provide high-productivity upgrade solutions for their installed base, and they are also reducing cycle time in factory to ship more systems. One way to reduce cycle time is through a fast shipment process that skips some of the testing in ASML factory. Final testing and formal acceptance then takes place at the customer site. This leads to a deferral of revenue recognition for those shipments until formal customer acceptance, but does provide customers with earlier access to wafer output capacity.

I think this is a Win Win for all in long run.

4) ASML expects first-quarter net sales between €3.3 billion and €3.5 billion with a gross margin of around 49%. ASML expects R&D costs of around €760 million and SG&A costs of around €210 million. The lower net sales guidance for the first quarter is due to a significant number of fast shipments, translating to approximately €2 billion of expected revenue shift from the first quarter to subsequent quarters. Looking at the full year – even taking into account the current expectation of fast-shipment-related revenue shifts of six EUV systems into 2023 – ASML expect a revenue growth of around 20%.

5) In the EUV business, ASML received one order for the TWINSCAN EXE:5000 in the fourth quarter. They have already received four orders in 2018. To me this further cement their technical leadership. You may find some random news, youtube on China or HuaWei progress on EUV breakthrough. I seriously have doubt on those information. Its not going to happen so soon assuming that those news are true.

The first order for the next generation, TWINSCAN EXE:5200, marking the next step on the path to 0.55 NA EUV introduction. Thats is a very key milestone

In their DUV business, the XT:860N was shipped to its first customer at the end of 2021. This KrF system offers improved performance and a lower cost per exposure. To me, these DUV system continue to be the cash cow, until EUV are fully adopted.

In 2022 ASML will add KrF to the NXT platform with the introduction of the NXT:870, allowing them to make a significant step in productivity and cost of ownership, building on the existing experience on this platform in ArFi and ArF dry.

Besider lithography tools,

in their Applications process control business, shipment of the first eScan1100 multibeam inspection system designed for high-volume manufacturing is planned in the coming weeks. With 25 beams (5x5), it expect the eScan1100 to increase throughput up to 15 times compared to single e-beam inspection tools for targeted in-line defect inspection applications

So overall, I am still very positive on ASML. Although the price is dropping but thats due to entire market sediment and Tech stock being hit worst. I see this as opportunity to take more position.

Happy investing to all and Happy Lunar New Year

@TigerStars@小虎活动