Morgan Stanley Lowers ASMPT (00522) Target Price to HK$215, Keeps Overweight Rating

Stock News10-30 11:14

Morgan Stanley has released a research report lowering its target price for ASMPT (00522) from HK$248 to HK$215 while maintaining its "Overweight" rating.

The firm remains optimistic about the company's long-term growth prospects, believing that emerging opportunities such as EMIT-T, CoPoS, and photonics will provide growth momentum, though industry headwinds may limit short-term upside. The firm considers the company's current valuation to be attractive.

The firm noted that management expects fourth-quarter 2026 orders to remain at elevated levels, supported by continued AI infrastructure investment, but orders will fall below the record level seen in the third quarter due to one-off factors in the SMT business and pull-forward demand.

The firm maintains a positive outlook for ASMPT's revenue growth in 2027 and 2028, projecting 20% growth in 2027 and 12% growth in 2028, primarily driven by strong AI demand and high OSAT capacity utilization.

Despite downward revisions to HBM specifications, the firm believes EMIT-T, CoPoS, and photonics remain emerging growth drivers. Photonics applications include pluggable optics, NPO, and CPO, with demand momentum remaining strong; EMIT-T and CoPoS are expected to unlock incremental opportunities in advanced packaging.

The firm also noted that semiconductor industry growth is expected to slow from 132% in 2026 to 35% in 2027. Equipment stocks, as leading indicators, will also come under pressure first when the industry cycle slows.

Morgan Stanley updated its model based on third-quarter 2026 results and fourth-quarter guidance, raising its 2026 and 2027 earnings per share forecasts by 2% and 5% respectively due to stronger semiconductor solutions and SMT order performance. The target price reduction mainly reflects a lowered medium-term growth rate forecast to account for delayed HBM capacity investment. ASMPT's current price equates to approximately 16 times 2027 forecast earnings per share, well below the past 10-year average of 27 times, which the firm considers an attractive valuation.

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