ASMPT: Global leader in packaging equipment. ASMPT was founded in 1975 in Hong Kong, China. ASMI, the majority shareholder, is a global leader in semiconductor front-line film equipment. The company is mainly engaged in semiconductor packaging equipment (SEMI) and SMT equipment businesses.
In recent years, performance has fluctuated slightly due to the impact of testing and the electronics manufacturing cycle. In 2023, the company achieved revenue of HK$14.697 billion and net profit of HK$715 million. By business, the SEMI business segment had revenue of HK$6.365 billion in 2023, accounting for 43.82% of the company's total revenue, and the SMT business segment had revenue of HK$8.332 billion, or YOY -10%, accounting for 56.18% of the company's total revenue. On the order side, the SEMI sector took the lead in recovering in 23Q4 and achieved a continuous month-on-month recovery in 24Q1. Increased demand for advanced packaging equipment brought about by the application of computing power is expected to become the company's main growth driver.
SEMI business: A leader in advanced packaging equipment with computing power. According to SEMI data, the global semiconductor packaging equipment market was US$5.78 billion in 2022 and is expected to reach US$5.95 billion by 2025. The company has leading market shares in both crystal fixing and wire welding equipment.
Benefiting from the booming development of artificial intelligence, advanced packaging equipment has become the company's main growth engine. The company's thermocompression solid crystal (TCB) equipment and hybrid bond solid crystal (HB) equipment can be widely used in 2.5D/3D packaging of AI acceleration cards and 3D stacked packaging of HBM. As of the 24Q1 quarterly report, the company's TCB products have been used in the C2S and C2W processes of the leading wafer foundry, and introduced to leading HBM manufacturers for 12-layer HBM stacking. HB equipment also received orders for 2 units for 3D packaging in 2023, and is developing next-generation HB products with customers.
The company's advanced packaging business contributed HK$3.1 billion in revenue for the full year of 2023, accounting for 22% of the company's total revenue. The company expects the global accessible market size corresponding to its advanced packaging equipment product line to be US$1.7 billion in 2024 and reach US$3.3 billion by 2028, with a compound annual growth rate of 18%.
SMT business: The focus is shifting to the automotive electronics market. The company's surface mount business is used for electronic assembly, and the revenue scale is relatively stable. The downstream covers consumer electronics, automotive, industrial electronics, aerospace, medical equipment and other markets. Demand for consumer electronics has weakened in recent years, and the automotive and industrial terminal market business has become the main driving force for the SMT business. The company's automotive terminal business market application revenue in 2023 was approximately US$410 million.
Furthermore, artificial intelligence-related server manufacturing etc. will also bring about a structural increase in the SMT business.
Investment advice: As a global leader in semiconductor packaging equipment, ASMPT has strong product strength. We expect the company to achieve revenue of HK$150.39/181.34/21,292 billion in 2024-2026, and a net profit of HK$12.01/20.05/2,891 billion, corresponding to the current PE price of 35/21/14 times. We are optimistic about ASMPT's leading position in the packaging equipment industry and the growth brought about by downstream computing power applications. We are optimistic about ASMPT's leading position in the packaging equipment industry and the growth brought about by downstream computing power applications. It is covered for the first time, giving it a “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.