ASM Earnings: Solid Performance and 15% Sequential Acceleration Expected; EUR 520 FVE Maintained

Narrow-moat ASM International delivered a solid second quarter with sequential order and revenue acceleration, which came in at EUR 755 million and EUR 706 million, a 8% and 6% sequential increase, respectively. On a year-over-year basis, orders grew 56%, although this is mainly explained by a weak second quarter in 2023 when macroeconomic uncertainty resulted in order postponements. Orders for Taiwan Semiconductor Manufacturing Company’s 2 nanometer logic node remain strong as gate-all-around technology picks up, while demand for high-bandwidth memory also remains strong as storage requirements are increasing for artificial intelligence training and inferencing. Along with many other wafer equipment suppliers, demand in China remains very strong as the country is likely ordering in anticipation of further export control restrictions. However, management expects softening demand across China in the second half of the year. These results are in line with our estimates and we maintain our EUR 520 fair value estimate with shares remaining overvalued by almost 30%.