CLSA Slightly Upgrades ASM Pacific Amid Rising HBM Orders
Recent Upgrade for ASM Pacific Technology
Recently, CLSA made a noteworthy update regarding ASM Pacific Technology (522:HK) (OTC: ASMVF) stock, increasing its price target to HK$82.10 from HK$80.00. This change reflects CLSA’s analysis following the company's third-quarter earnings for 2024. The earnings report was met with some disappointment, as it fell short of consensus expectations by 86%. Although, once foreign exchange impacts were factored in, the discrepancy was reduced to 21%.
Performance Insights
Despite the below-expected earnings, ASM Pacific Technology revealed that its revenue landed at the higher end of its guidance range. Additionally, the company’s gross margin exceeded predictions by a margin of 0.7 percentage points. However, it is important to note that the recovery of ASM's mainstream equipment sector has been slower than anticipated, as highlighted by CLSA's evaluation.
Significant Progress in HBM Orders
CLSA's report outlines a mixed outlook; it notes that while Surface Mount Technology (SMT) bookings have reached a low point, there has been significant advancement in ASM Pacific Technology's Thermal Compression Bonding (TCB) for Hybrid Bonding Memory (HBM). The company has received considerable orders from a prominent HBM player and is projected to begin generating substantial revenue within this segment, starting in the fourth quarter of 2024.
Future Projections and Recommendations
Given these recent developments, CLSA has revised its earnings forecasts for ASM Pacific Technology and updated its valuation metrics, thus leading to a slight increase in the price target. The firm's overall rating remains a Hold, indicating that while the horizon seems positive, especially regarding the TCB for HBM segment, investors are advised to hold onto their current positions until further signs of noteworthy growth emerge.
Frequently Asked Questions
What recent changes did CLSA make regarding ASM Pacific Technology?
CLSA raised the price target for ASM Pacific Technology from HK$80.00 to HK$82.10 while maintaining a Hold rating following its latest earnings report.
How did ASM Pacific's earnings perform compared to expectations?
The company's third-quarter earnings fell short of consensus expectations by 86%, but the impact of foreign exchange adjusted the miss to 21%.
What is the current state of ASM Pacific's revenue?
ASM Pacific Technology reported revenue at the higher end of its guidance range, with a gross margin exceeding predictions.
Where is the growth potential for ASM Pacific?
Significant progress has been made in the Thermal Compression Bonding (TCB) segment for Hybrid Bonding Memory (HBM), where substantial orders have been received from a key player.
What does CLSA recommend for investors regarding ASM Pacific?
CLSA advises maintaining current positions in ASM Pacific Technology stock, highlighting positive prospects while cautioning against rapid investments until further growth signals are observed.
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