On Thursday, CLSA updated its outlook on ASM Pacific Technology (522:HK) (OTC: ASMVF) stock, raising the price target to HK$82.10 from HK$80.00, while keeping a Hold rating on the stock. The adjustment follows the company's third-quarter earnings for 2024, which, according to the firm, fell short of consensus expectations by 86%. However, when accounting for foreign exchange impacts, the miss was narrowed to 21%.
ASM Pacific Technology reported that its revenue was at the higher end of its guidance range, and its gross margin surpassed consensus predictions by 0.7 percentage points. Despite this, the company's mainstream equipment sector is experiencing a slower recovery than expected, as per the firm's analysis.
The report from CLSA indicates that while Surface Mount Technology (SMT) bookings are reaching a low point, ASM Pacific Technology's Thermal Compression Bonding (TCB) for Hybrid Bonding Memory (HBM) has shown significant progress. The company has reportedly received substantial orders from a key HBM player and is expected to start generating revenue from this segment starting in the fourth quarter of 2024.
In light of these developments, CLSA has revised its earnings forecasts for ASM Pacific Technology and updated its valuation, leading to the increase in the price target. The firm's stance remains a Hold, suggesting that while the company's prospects are improving, particularly in the TCB for HBM segment, investors should maintain their current positions until further growth is evident.
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