Event: On July 24, ASMPT released its 2024 mid-year report. The company achieved revenue of HK$3.34 billion, YOY -14.3%, and QOQ +6.5% in Q2 of 2024; realized net profit of HK$0.137 billion, YOY -55.6%, and QOQ -23.0%.

Q2 performance was in line with expectations, and SMT demand weakened, and Q3 guidance was under pressure. The company's 24Q2 revenue in a single quarter was HK$3.34 billion (US$0.427 billion), YOY -14.3%, and QOQ +6.5%, close to the upper limit of the previous guidance (US$0.38-0.44 billion). By business, the semiconductor business has maintained a good growth trend, while the SMT business is still limited by declining demand:

On the semiconductor side, 24Q2 achieved revenue of HK$1.66 billion, YOY +0.4%, QOQ +20.9%, net profit of HK$0.09 billion, YOY +218.3%, gross profit margin of 44.5%, YOY +1.83pct, new orders of HK$1.74 billion, YOY +36.7%, and QoQ +11.6%. The high growth was mainly driven by TCB equipment.

On the SMT side, 24Q2 achieved revenue of HK$1.68 billion, YOY -25.2%, QOQ -4.7%, net profit of HK$0.19 billion, YOY -55.5%, QOQ -34.4%, new orders of HK$1.39 billion, YOY -20.6%, and QOQ -15.6%. The decline was mainly due to declining demand in the automotive and industrial markets.

Constrained by the downturn in the SMT business, the company reported revenue of 0.37-0.43 billion dollars in 24Q3, with a median YOY of -9.9% and a QOQ of -6.4%.

TCB's new products are progressing smoothly, and HB has made breakthrough progress. As a global leader in advanced packaging equipment, the company has made continuous breakthroughs in the field of advanced packaging and HBM packaging for computing power chips. Currently, the company's TCB equipment can achieve accuracy of less than 1um and micro-bump spacing as low as 10um. The technical performance is leading in the industry, and HybridBonding equipment continues to gain breakthroughs from new customers.

On the logical customer side, the company's 24Q2 orders for TCB equipment continued to grow, received C2W process orders from leading customers, and cooperated with customers to develop next-generation fluxless (fluxless) TCB equipment.

For HBM customers, the company's TCB equipment is progressing well on the main customer's 12Hi production line, and received 2 fluxless orders in July. At the same time, the company's HB equipment was ordered for 2 units for the HB market for the first time, and customer expansion was achieved again after receiving logical customer orders in 24Q1.

Investment advice: As a global leader in semiconductor packaging equipment, ASMPT has strong product strength.

Referring to the company's performance guidelines, we adjusted the company's 2024-2026 revenue forecast to HK$14.622/17.676/20.478 billion, and adjusted the net profit forecast to HK$0.904/1.553/2.221 billion, corresponding to the current PE price of 40/23/16 times. We are optimistic about ASMPT's leading position in the packaging equipment industry and maintain the “recommended” rating.

Risk warning: The recovery of the semiconductor industry falls short of expectations; market competition intensifies; the introduction of new product certification falls short of expectations.