ASM Pacific Technology’s Mixed Earnings Call Reveals Key Insights

ASM Pacific Technology ((HK:0522)) has held its Q1 earnings call. Read on for the main highlights of the call.

The recent earnings call for ASM Pacific Technology presented a mixed sentiment, highlighting notable achievements in the Advanced Packaging and SEMI segments, alongside effective cost control measures. However, these positive aspects were tempered by challenges in the mainstream business, a decline in adjusted net profit, and difficulties in the SMT business, primarily due to market softness and tariff uncertainties.

Group Revenue Achievement

The company reported group revenue of USD 401.5 million, aligning with the midpoint of their revenue guidance. This achievement underscores the company’s ability to meet its financial projections despite a challenging market environment.

Advanced Packaging Solutions Success

ASM Pacific Technology’s Advanced Packaging Solutions, particularly in Thermal Compression Bonding (TCB) tools, continued to excel. The segment expanded its customer base with initial orders from another global HBM customer, indicating strong market demand and technological leadership.

Gross Margin Rebound

The group experienced a rebound in gross margin, exceeding 40%, which was driven by a better product mix. This improvement highlights the company’s strategic focus on high-margin products to enhance profitability.

SEMI Segment Growth

SEMI segment revenue grew to USD 255.6 million, marking a 0.6% increase quarter-on-quarter and a significant 44.7% rise year-on-year. This segment contributed about 64% of the group’s total revenue, showcasing its vital role in the company’s overall performance.

Cost Control Measures

The company implemented disciplined cost control measures, resulting in an 11.3% reduction in operating expenditure quarter-on-quarter. This strategic approach helped mitigate some of the financial pressures faced by the company.

Decline in Adjusted Net Profit

Adjusted net profit was reported at HKD 83.2 million, reflecting a 1.6% increase quarter-on-quarter but a 53.1% decline year-on-year. This decline was attributed to a slight reduction in gross margin and increased operating expenses.

SMT Business Decline

The SMT segment reported revenue of USD 145.9 million, a decline of 20.3% quarter-on-quarter and 35.6% year-on-year. This downturn was due to ongoing softness in its overall market, highlighting the challenges faced in this segment.

Challenges in Mainstream Business

The mainstream business continued to struggle with soft demand from automotive and industrial end markets, impacting overall performance and profitability.

Year-on-Year Gross Margin Decline

The group’s gross margin declined by 97 basis points year-on-year, reflecting the ongoing challenges in maintaining profitability in a competitive market.

Forward-Looking Guidance

Looking ahead, ASM Pacific Technology anticipates revenue between USD 410 million and USD 470 million for the next quarter, reflecting a 9.6% quarter-on-quarter increase at the midpoint. The company remains optimistic about its growth prospects, driven by strategic investments and a favorable product mix.

In summary, ASM Pacific Technology’s earnings call highlighted a mixed performance with significant achievements in certain segments, offset by challenges in others. The company’s strategic focus on cost control and high-margin products positions it well for future growth, despite current market uncertainties.