ASMPT Earnings: Turnaround Is Coming, but Timing Looks Delayed

ASMPT’s management guided to third-quarter revenue, implying a 9.6% decline year on year. Management indicated that the “recovery of SEMI mainstream business is taking longer than anticipated due to tepid consumer spending. Moreover, the SMT business continues to experience a softening market in the near term.” Second-quarter revenue declined by 14.3% year on year, with earnings per share down 56% year on year. On the positive side, ASMPT continues to see strong demand from advanced packaging, which is a higher-margin product set, and is leveraged to growth in high-performance computing and generative artificial intelligence. Industry body SEMI forecasts global assembly and packaging equipment revenue growth of 9.9% in 2024 and 35% in 2025. We believe a recovery is likely coming, and given the volatility in this industry it is likely to be a large one, but it looks like it is delayed by at least one quarter from our previous expectations. We have seen solid underlying revenue and earnings per share growth over the past 12 years from ASMPT and we would expect this trend to continue in the foreseeable future, albeit with the extreme volatility of this industry. ASMPT remains leveraged to the global semiconductor and electronics market, and we expect both to expand in the long term. We see no signs of ASMPT’s products losing their technological competitiveness, so we would expect the company to fully participate in a market rebound when it comes.