Everbright Securities has released a research report stating that strong AI demand is driving ASMPT (00522) orders across multiple areas including TCB, CPO, and FC to continue surging, with new orders in FY26Q3 hitting a record high, further validating its global leadership position in SEMI and SMT. The company will further focus resources on back-end packaging and core SMT businesses, and its profit margin center is expected to continue shifting upward. The broker raised its FY26-28 net profit forecasts by 4%/5%/2% to HK$1.896 billion/HK$3.011 billion/HK$4.075 billion. Accelerated TCB deployment across multiple scenarios and faster CPO commercialization are expected to open up valuation upside. The "Buy" rating is maintained. The main views of Everbright Securities are as follows.
Event
On a continuing operations basis, the company reported FY26Q3 revenue of US$669 million (approximately HK$5.247 billion), up 48.7% year-on-year and 6.3% quarter-on-quarter, landing in the upper half of the prior guidance range of US$630-690 million and 1.4% above the midpoint. New orders in FY26Q3 reached US$1.128 billion, up 137.9% year-on-year and 24.7% quarter-on-quarter, with a book-to-bill ratio of 1.69, the highest level since FY21Q1. Adjusted gross margin was 42.9%, up 517bps year-on-year and 35bps quarter-on-quarter; adjusted net profit was HK$690 million, up 486.3% year-on-year and 8.2% quarter-on-quarter, with margin improvement and operating leverage release jointly driving profitability higher.
New Orders Hit Record High, Dual Drivers from SEMI and SMT Businesses
FY26Q3 new orders reached US$1.128 billion, up 137.9% year-on-year and 24.7% quarter-on-quarter, mainly driven by TCB, photonics, and SMT products, reflecting continuously strengthening demand for advanced packaging, optical communications, and electronic assembly equipment from AI infrastructure buildout. Meanwhile, lead times for advanced packaging products remain at a relatively long 6-9 months; the SMT business also secured large orders worth over US$100 million in total plus advance booking demand. Therefore, the Q3 order surge reflects both structural AI-related demand and a certain degree of order timing pull-forward.
1) Semiconductor Solutions business (SEMI): FY26Q3 SEMI new orders were US$563 million, up 156.3% year-on-year and 31.3% quarter-on-quarter, the highest level since FY21Q1; revenue was US$374 million, up 68.0% year-on-year and 1.5% quarter-on-quarter. On profitability, SEMI adjusted gross margin was 46.6%, up 502bps year-on-year and 6bps quarter-on-quarter; adjusted segment profit was HK$595 million, up 620.9% year-on-year and down 1.3% quarter-on-quarter, with the slight sequential decline mainly due to increased bonus provisions. SEMI order growth significantly outpaced revenue growth, mainly because advanced packaging products accounted for a higher share of the order mix, and such orders typically take 2-3 quarters to convert into revenue.
2) SMT business: FY26Q3 SMT new orders were US$565 million, up 122.1% year-on-year and 18.9% quarter-on-quarter, hitting a record high for the third consecutive quarter; revenue was US$295 million, up 29.8% year-on-year and 13.2% quarter-on-quarter, mainly driven by growing demand for AI servers and optical transceivers. On profitability, SMT adjusted gross margin was 38.2%, up 425bps year-on-year and 131bps quarter-on-quarter; adjusted segment profit was HK$410 million, up 143.2% year-on-year and 44.1% quarter-on-quarter, with adjusted segment margin rising to 17.7%. Higher sales volume and improved operating efficiency drove a significant improvement in SMT profitability.
TCB Business Orders Continue to Break Through; Photonics, FC, and Mainstream Packaging Equipment All Benefit from AI Demand
1) TCB: In the logic segment, C2S equipment won orders from an OSAT partner of a leading advanced logic customer, mainly for larger-size composite chips and other AI-related advanced packaging applications; C2W equipment received repeat orders from a globally leading IDM customer's advanced CPU project, covering client computing and AI inference applications. In the memory segment, changes in HBM4 product introduction pace have affected equipment procurement timing to some extent, but capacity expansion and equipment upgrade demand remains. Management expects the serviceable TCB market to exceed US$1.6 billion by 2028, with incremental growth mainly from logic applications including CPU, C2W, silicon bridge integration, and panel-level packaging, and logic applications are expected to become the main component of the TCB market in the future. In panel-level packaging, the company has conducted quarter-panel sample bonding with a leading advanced logic customer and participates in embedded and surface silicon bridge projects with a leading IDM customer; related orders could land as early as late 2027, with some revenue potentially recognized starting in 2028, though the exact timing still depends on customer yield and capacity ramp-up.
2) Photonics and CPO: Driven by capacity expansion demand for 800G, 1.6T, and next-generation high-speed optical modules, FY26Q3 photonics orders and revenue both hit record highs. Pluggable optical transceiver (POT) solutions received significant orders, AMICRA achieved a major order breakthrough in near-package optics (NPO), and the company also won an optical transceiver equipment order from a leading communications service provider. Management stated that this order is not a one-off opportunity, and cooperation with the related customer is expected to continue through 2027, with the photonics business also expected to sustain growth in 2027. On technology timing, NPO is expected to ramp before co-packaged optics (CPO), with CPO mass production expected closer to the late 2020s.
3) Flip-chip high-precision die bonding (FC): Driven by demand for customized AI ASICs, fan-out wafer-level packaging, and high-capacity, large-size chip assembly, FC business revenue continued to grow.
4) Hybrid bonding: The company's second-generation solution is being developed with Tier 1 fabs and leading IDMs, with some projects already in the certification stage. The company is seeking to enter related customers as a second supplier, and management expects related demand may gradually be released over the next 12-18 months.
5) Mainstream semiconductor equipment: AI server power management and high capacity utilization at Chinese OSATs drove demand growth for wire bonders and die bonders. Q4 mainstream business orders remain at a high level, and the company has not yet observed order cancellations in consumer electronics.
Company Guides FY26Q4 Revenue of US$670-730 Million, Midpoint Corresponding to +37.5% YoY and +4.6% QoQ
By business, SMT revenue is expected to achieve double-digit sequential growth and continue to be the main driver of revenue growth; SEMI revenue is expected to be broadly flat sequentially due to the longer delivery cycles of advanced packaging products. On orders, the company expects Q4 new orders to remain at a high level year-on-year, but as Q3 included a one-off large SMT order and customer advance bookings, Q4 orders are expected to be below Q3's record high. Looking ahead to 2027, management expects AI infrastructure-related demand to continue driving growth in advanced packaging, photonics, and SMT businesses, boosting revenue. On gross margin, management expects SEMI gross margin to continue benefiting from a higher share of advanced packaging products, with the medium- to long-term gross margin center expected to remain above 45%; SMT gross margin is expected to hold up if demand remains high.
Risk Factors
Global macroeconomic and semiconductor cycle fluctuations; geopolitical and export control policy changes; advanced packaging, CPO, and hybrid bonding technology progress falling short of expectations; intensifying industry competition; one-off large orders and advance ordering causing order volatility in subsequent quarters; extended lead times for key materials affecting order-to-revenue conversion.
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