The leading semiconductor stock in Hong Kong plummeted 23%, wiping out billions in market value. Has ASMPT entered a trial by fire?
According to Caihua News, on July 24, the leading company in the semiconductor packaging sector of the Hong Kong stock market, $ASMPT(00522.HK) plummeted sharply. As of press time, the decline widened to 23.41%, trading at HKD 87.7, with the latest total market capitalization at HKD 36.352 billion, evaporating approximately HKD 11.16 billion compared to the previous trading day's HKD 47.52 billion.
On the news front, ASMPT announced its 2024 interim results, which were disappointing.
According to the financial report, in the first half of 2024, ASMPT's revenue was HKD 6.48 billion, a year-on-year decrease of 17.1%; net profit attributable to shareholders was HKD 314 million, down 49.6% year-on-year, nearly halved.
Additionally, the significant reduction in dividends further exacerbated investor disappointment.
The announcement showed that ASMPT plans to distribute an interim dividend of 35 HK cents per share, a 42.6% reduction from the 61 HK cents in the same period last year.
In the second quarter, ASMPT's revenue was HKD 3.34 billion, a year-on-year decline of 14.3%; net profit attributable to shareholders was HKD 137 million, down 55.6% year-on-year; gross margin was 40%, a 0.1 percentage point decrease from the same period last year. Overall, there were no signs of a rebound in Q2 performance.
Morgan Stanley noted in a report that ASMPT's Q2 results fell short of expectations, with revenue of HKD 3.342 billion, 4% and 3% higher than the bank's and market expectations, respectively. Net profit was HKD 135 million, 25% and 34% lower than the bank's and market expectations, respectively.
Data shows that ASMPT is a leading global provider of hardware and software solutions for semiconductor and electronics manufacturing, with products covering semiconductor assembly and packaging (chip integration, soldering, packaging) and SMT (surface mount technology), from wafer deposition to various solutions that help organize, assemble, and package fine electronic components for use in end-user devices such as electronics, mobile communications, computing devices, automotive, industrial, and LED (display panels).
By business segment, ASMPT primarily operates through two divisions: Semiconductor Solutions and Surface Mount Technology Solutions.
In recent years, the semiconductor industry has been deeply affected by cyclical fluctuations and is currently in a "bottoming-out" phase. At the same time, the recovery in consumer electronics demand has fallen short of expectations, putting sustained pressure on the performance of semiconductor companies, including ASMPT.
In the first half of this year, ASMPT's Semiconductor Solutions and Surface Mount Technology Solutions divisions saw revenue decline by 17.1% and 5.8% year-on-year, respectively.
Faced with industry-wide challenges, some industry insiders noted that semiconductors are a highly cyclical industry, currently in a slow recovery phase from the bottom, and it will take time to reach the peak. The overall environment remains challenging.
ASMPT also admitted in its interim results announcement that due to moderate consumer spending, its Semiconductor Solutions business will take longer than expected to recover. Additionally, the Surface Mount Technology Solutions division continues to face a market slowdown in the short term.
Looking ahead to Q3, ASMPT's performance remains bleak. The company expects Q3 revenue to be between USD 370 million and USD 430 million, with the midpoint representing a year-on-year and quarter-on-quarter decline of 9.9% and 6.4%, respectively, primarily due to lower revenue from the Surface Mount Technology Solutions division.
However, amidst the challenges, new opportunities are emerging, especially with the rapid development of AI, big data, and cloud computing, which are driving increased demand for high-performance computing and high-density integration, providing broad growth potential for advanced packaging technologies.
ASMPT management believes that since the Semiconductor Solutions and Surface Mount Technology Solutions divisions have different business cycles, their growth and slowdowns can complement each other. Additionally, management stated that advanced packaging and mainstream solutions address different industry layers, helping the company navigate various industry cycles.
Morgan Stanley, however, noted that based on the midpoint, ASMPT's expected Q3 revenue represents a 6.4% quarter-on-quarter decline, 17% and 20% lower than the bank's and market expectations, respectively. While the company remains optimistic about advanced packaging in the short term, it believes the mainstream semiconductor business will take longer to recover.
Author: Bottle
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