Release Date: July 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Strong demand for advanced packaging (AP) solutions, with AP bookings showing significant year-on-year and half-on-half growth.
- Increased contribution of AP solutions to group revenue, rising from 22% last year to 35% in the first half of 2024.
- SEMI segment showed growth in bookings both half-on-half and year-on-year, with a book-to-bill ratio above one.
- Group gross margin improved year-on-year and half-on-half, driven by favorable product mix in SEMI.
- Healthy balance sheet with cash and bank deposits at HKD5.44 billion and bank borrowings at HKD2.53 billion.
Negative Points
- Revenue for the first half of 2024 declined 17.1% year-on-year and 5.8% half-on-half due to declines in both SEMI and SMT segments.
- Operating margin decreased by 512 basis points year-on-year, mainly due to lower sales.
- Adjusted net profit fell by 49.5% year-on-year.
- SMT bookings declined 15.6% quarter-on-quarter, reflecting market softness, particularly in automotive and industrial end markets.
- Revenue guidance for the third quarter indicates a decline of 9.9% year-on-year and 6.4% quarter-on-quarter, mainly due to lower revenue from SMT.
Q & A Highlights
Q: Can you provide an update on the TCB segment, including your expectations for ASMPT shipments and the progress on fluxless TCB tools?
A: (Cher Tat Ng, CEO) We are on track with our TCB business, having shipped around 350 tools by the end of 2023. For fluxless TCB, we are in joint development with a leading foundry and have won orders for two tools for HBM applications. We expect fluxless TCB shipments to start in the second half of 2024.
Q: What is the outlook for SEMI and SMT segments in the third quarter and the second half of the year?
A: (Cher Tat Ng, CEO) We expect Q3 revenue to be around $400 million, down 10% year-on-year and 6% quarter-on-quarter, mainly due to SMT softness. SEMI revenue is expected to be flattish, with positive momentum in AP business. SEMI mainstream recovery is slower than anticipated, but we see increasing wire-bond and die-bond business for consumer applications.
Q: Can you provide more color on the bookings for the third quarter?
A: (Cher Tat Ng, CEO) We expect group bookings for Q3 to decline slightly in low single digits quarter-on-quarter, mainly due to SMT. SEMI bookings are expected to be flattish with an upside bias. We believe SMT bookings are near the bottom, while SEMI bookings have shown year-on-year increases since Q4 2023.
Q: How do you see equipment throughput for TCB improving, and can you increase prices if throughput improves?
A: (Cher Tat Ng, CEO) Generally, next-generation tools have better capabilities, including placement accuracy and throughput. Customers are willing to pay more for advanced tools, and this applies to AP tools as well.
Q: What is the impact of potential stricter rules on selling equipment to China, given that China is your largest market?
A: (Cher Tat Ng, CEO) We ensure compliance with all applicable laws and regulations. Back-end equipment, which includes assembly and test of packaged ICs, is excluded from recent restrictions. This is a positive development for ASMPT.
Q: Can TCB be used for glass substrates in advanced packaging?
A: (Cher Tat Ng, CEO) Yes, TCB can bond on glass as well as other substrates. We see a trend towards using glass substrates for panel bonding rather than wafer bonding.
Q: Can you share some color on the revenue guidance by countries, especially regarding China's recovery?
A: (Cher Tat Ng, CEO) In the near term, we see more green shoots from consumer areas, typically from Chinese-based customers. We expect China's contribution to increase relative to the US and Europe, especially as SMT has softened in those regions.
Q: What is the outlook for hybrid bonding tools, and how does it compare to TCB?
A: (Cher Tat Ng, CEO) We won orders for two hybrid bonding tools from one customer. However, we believe TCB remains in a sweet spot for HBM applications, with hybrid bonding being more for research and development at this stage.
Q: How do you see the long-term trend for TCB shipments, and can you provide any forward-looking guidance?
A: (Cher Tat Ng, CEO) The future for TCB is bright, with significant potential going forward. We expect TCB contributions to remain strong in 2025 and beyond.
Q: Are you considering any cost actions for SMT solutions given the downturn, and what is your approach to shareholder returns?
A: (Yifan Xu, CFO) We always keep cost measures in mind, but I have no specific actions to announce. Regarding shareholder returns, we have a dividend policy of 50% of earnings and will consider the total payout for the year. Currently, we have no plans for share buybacks.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
