<News Alert> 2Q24 results and guidance for 3Q24 beat
- QDec’23 results beat management’s guidance and QMar’24 guidance beat consensus
- Management guides for y-o-y improvement in earnings in QMar’24, driven by gross margin expansion
- Expect end-market demand recovery of memory to boost the growth in 2024, despite a more cautious outlook on logic. Maintain BUY with TP of $927.0.
QDec’23 results and management’s guidance on QMar’24 beat. QDec’23 revenue was $3.76bn (+8% q-o-q, -29.8% y-o-y). Gross margin came in at 46.8% vs.47.5% in QSep23. Non-GAAP EPS further increased to $7.52 increased 9.8% q-o-q (-34% y-o-y). QDec’23 earnings saw a beat of c.7.4% from the guidance from management while revenue exceeds by c.2%. Compared to consensus estimates, QDec’23 EPS exceeded by 5.6% while revenue is largely in line. China’s revenue contribution decreased to 40% vs. 48% in QSep’23, still accounting for the largest proportion. It followed by 19% from Korea and 14% from Japan. For QMar’24, the group forecasts revenue of c.$3.7bn (-4.4% y-o-y) and US Non-GAAP EPS of c.$7.25 (+3.7% y-o-y), based on the mid-point of the forecasts, ahead of the market consensus. This mainly driven by the continuous improvement in gross margin, expecting to increase to 48.0%.
Memory end-market recovery to fuel growth in 2024. Demand from memory is expected to recovery moderately while logic businesses are still relatively sluggish in 2024. The growth of DRAM is expected to be continuously driven by capacity addition in HBM and node conversions while that of NAND is expected to be continuously driven by technology upgrades. Emerging growth catalysts, especially the rising demand of AI server, are poised to significantly influence investments in both memory and foundry logic fabs in the coming years. Maintain BUY with a TP of $927.0.