ASMPT Earnings: No Turnaround in First-Quarter 2024 but Growth Expected in 2024; Valuation Retained

ASMPT guided to first-quarter revenue implying a 20% decline year on year and 8% decline quarter on quarter at the midpoint of the guidance range. However, management expects first-quarter 2024 bookings to be around 20% higher than fourth-quarter 2023. It expects a revenue turnaround in 2024, but it is still too early for a clear vision on the rate of the recovery. One leading indicator could be fourth-quarter bookings in the semiconductor segment, up 10% year on year. This segment normally leads the surface mount technology solutions segment. Fourth-quarter revenue declined by 21% year on year with net profit down 28% year on year. Despite the industry volatility 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 grow in the long term. The firm discussed recent demand driven by high-performance computing and generative AI, with the firm’s advanced packaging solutions expected to play an increasing role in both, and we believe this potential leverage to AI is the likely reason for recent share price strength. 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. The firm increased its research and development spending slightly in 2023 despite the revenue declines.