<Earnings First Take> 4Q23 earnings missed expectations; 1Q24 revenue guidance disappoints
- 4Q23 net profit plunged 72% due to higher-than-expected operating expenses
- Management guides for c.26% revenue decline in 1Q24, missing consensus by 12%, due to the slow recovery in consumer electronics end-demand
- The disappointing guidance reinforces our cautious view on its near-term outlook. Maintain HOLD
4Q23 earnings plunged 72% and 1Q24 guidance indicates 26% y-o-y revenue drop, missed. ASMPT (522 HK) released its 4Q23 results after HK market close yesterday. 4Q23 revenue fell by 21.4% y-o-y to HK$3.40bn, primarily due to weakened consumer electronics end-market demand, especially in China. The revenue decline is largely in line with management’s guidance. Despite a 0.9ppt y-o-y increase in the gross margin, driven by a favourable product mix in the SMT business, gross profit decreased by 19.7% y-o-y to HK$1.44bn,. Operating profit decreased 68.6% y-o-y to HK$186m, as opex was maintained at a high level despite a 21% decline in revenue. Net profit plunged 71.6% y-o-y to HK$75.7m accordingly, missing market expectations by 56%. The company proposed a final DPS of HK$0.26 and a special DPS of HK$0.52, with the FY23 payout ratio increase to 80% from 50% in FY22. The company’s net cash position was at an all-time high of HKD 2.8bn.
Expect near-term share price pressure, as 4Q23 earnings and 1Q24 guidance miss market expectations. The management expects 1Q24 revenue to range between HK$2.88bn and HK$3.35bn, implying a y-o-y decline of 25.9% at the midpoint, 12% below the consensus. Industry research projected sluggish sales growth of 3% in fab equipment for 2024 due to the limited addition of memory capacity and a pause in the expansion of mature capacity. The guidance of slow top-line growth for 1Q24 reinforces our cautious view on the near-term outlook. We expect it may take longer for the increasing end-market demand from AI applications to be reflected in the company’s orderbooks. We currently rate the counter a HOLD with TP under review.