Caitong Securities has released a research report stating that ASMPT (00522) is experiencing an accelerated recovery in its SMT business, driven by the synergistic effects of AI server demand and domestic market needs. Concurrently, the SEMI segment is entering a new upcycle alongside HBM capacity expansion. The firm initiates coverage with an "Add" rating.
Caitong Securities' primary views are as follows: Advanced packaging equipment is ramping up volume, and comprehensive positioning allows for deep benefits from the global AI/HPC trend, which is driving rapid adoption of advanced packaging processes like TCB and Hybrid Bonding, propelling equipment demand into a sustained volume growth cycle. The company possesses a complete equipment matrix for advanced packaging, covering key processes such as deposition, TCB, HB, Fan-out, and SiP. It holds the leading global market share in TCB and has completed generational upgrades and volume delivery of its HB equipment. With the commencement of HBM capacity expansion and the continuation of equipment procurement cycles for advanced logic fabs, the company is poised to capture the largest incremental gains from this industry's structural expansion, leading to sustained growth in advanced packaging revenue and global market share.
The company is at an inflection point for both orders and profitability, with an increasing proportion of high-margin products driving profit recovery. New orders have increased year-on-year for six consecutive quarters, as the synergy between AI server demand and domestic requirements accelerates the SMT business's recovery, while the SEMI segment enters a new upcycle with HBM expansion. The rising contribution from advanced packaging, structural improvements in SMT, and expense optimization are driving an inflection point in gross margin and profitability, with significant earnings elasticity expected from 2025 to 2027.
Against the backdrop of US export controls and an accelerating pace of domestic substitution, capital expenditure from domestic packaging and testing plants remains high. As the only packaging equipment supplier with ECD supply capability, and leveraging its deep local network and leading customer resources in China, the company is well-positioned to continuously benefit from the push for supply chain autonomy and domestic substitution policy tailwinds.
Investment recommendation: The company benefits from long-term trends in advanced packaging, order recovery, and improved profitability structure, presenting a clear growth thesis. The firm forecasts the company's operating revenue for 2025-2027 to be HKD 14.114 billion, HKD 16.573 billion, and HKD 18.905 billion, representing year-on-year growth of 6.69%, 17.42%, and 14.07%, respectively. Net profit attributable to shareholders is projected to be HKD 419 million, HKD 1.113 billion, and HKD 1.715 billion for the same period, corresponding to P/E ratios of 85x, 32x, and 21x for 2025-2027. Coverage is initiated with an "Add" rating.
Risk warnings include potential substitution of technology routes; risks associated with weak demand in traditional downstream markets; geopolitical and supply chain disruption risks; and volatility in customer orders.
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