ASM Pacific Technology Announces 2020 Annual Results
ASM Pacific Technology Limited (“ASMPT” / the “Group”) (Stock code: 0522) announced its annual results for the year ended 31 December 2020. ASMPT’s technologies enable its diverse range of customers to create a wide range of semiconductor and electronic products and services for the digitally-enabled world.
Group Highlights - FY 2020
Ably navigating unprecedented events in 2020 arising from the COVID-19 pandemic, a global recession and trade tensions, the Group emerged relatively unscathed, managing to achieve year-on-year (YoY) 6.3% revenue growth of HK$16.89 billion (equivalent to US$2.18 billion) for the year ended 31 December 2020 (2019: HK$15.88 billion, equivalent to US$2.03 billion).
The Group’s excellent financial performance in 2020 was driven by several factors. For one, global digital transformation trends accelerated, creating strong demand for personal computing, connectivity and HPC devices. This increased customer demand for both the Group’s mainstream tools and its Advanced Packaging (AP) solutions (AP experienced a YoY revenue growth of more than 50%). The global 5G roll-out also increased capacity and capability requirements among customers. And finally, green shoots also began to surface even within the hard-hit automotive space in the second half of 2020, benefitting both the Group’s Semiconductor Solutions and SMT Solutions segments.
The Group’s relatively strong revenue performance was also achieved in tandem with strong YoY booking momentum growth of 16.7%, made even more prominent by its second half bookings exceeding the first half’s for the first time since 2010. The Group’s bookings for its AP tools saw a broadening of customer demand from global integrated device manufacturers, leading fabless and foundry companies, high-density substrate manufacturers and key outsourced assembly and test companies.
The Group’s net profit (including one-off items and related tax impact) was HK$1.63 billion, representing a YoY improvement of 162.0%. The two one-off items were as follows:
- A gain of HK$859.0 million due to the completion of the Group’s planned divestment of 55.56% of its Materials Segment.
- Efforts to simplify the Group’s product portfolio resulted in provisions totalling HK$255.3 million relating to inventory write-down, supplier contract termination and manufacturing assets impairment. This is one key initiative among several the Group is undertaking to enhance its market position, operational efficiency and cost structure.
The Group ended FY 2020 with a strong backlog of HK$5.93 billion (US$764.8 million) and a book-to-bill ratio of 1.09. As at 31 December 2020, the Group held a record cash and bank deposits of HK$4.46 billion.
In line with the Group’s performance, the Board of Directors recommended a final dividend of HK$2.00 (2019: final dividend of HK$0.70) per share. The total dividend payout for 2020 will be HK$2.70 (2019: HK$2.00) per share, representing a payout ratio of 68%. This extends the Group’s proven track record of consistently paying dividends every year since its HKEX listing in 1989, right through the peaks and troughs of global economic and semiconductor cycles.
Group Highlights – Q4 2020
The Group recorded revenue of HK$4.92 billion (US$634.4 million), representing growth of 10.5% YoY and 15.2% QoQ. This came in well above the top end of revenue guidance between US$530 million and US$590 million.
The Group’s Q4 bookings of HK$5.10 billion (US$658.2 million) were a historical high for its Q4 quarter, an increase of 46.3% YoY and 12.9% QoQ. This excellent result bucked the general seasonal trend for its Q4 bookings tending to be the lowest of the year.
“Although ASMPT was initially affected by the COVID-19 pandemic in 2020, the resilience and adaptability of our employees, suppliers and partners were crucial in enabling our operations to decisively resolve operational constraints and continue delivering on our customer commitments,” explained Mr. Robin Ng, ASMPT’s Group Chief Executive Officer. “While the pandemic continues to present challenges, we also see unprecedented opportunity from accelerated digital transformation trends among companies, societies and global economies, for example, the increase in ‘life-from-home’ activities of all kinds. This significant uptick in digital requirements and needs, in tandem with mega-trends in key areas such as 5G technology, HPC and automotive electrification, drove very robust semiconductor demand globally.”
Segment Highlights – Q4 2020
Semiconductor Solutions Segment
The Semiconductor Solutions Segment’s Q4 2020 revenue was its highest Q4 ever recorded. Revenue of HK$2.38 billion (US$306.6 million) represented strong growth of 17.3% YoY and 24.1% QoQ. The Segment’s excellent revenue performance was driven by the following developments:
- Its IC/Discrete Business Unit experienced strong demand for mobile and personal computing devices and HPC applications.
- Its Optoelectronics Business Unit recorded strong demand from conventional display and general lighting customers, with growing opportunities in Mini LED and Micro LED applications as well.
- Its CIS Business Unit delivered a QoQ revenue rise, an improving sign for this application space.
- At the product level, this Segment’s mainstream die and wire bonders also delivered very strong YoY Q4 revenue growth.
Segment bookings of HK$2.59 billion (US$333.6 million) were also the highest ever for Q4, and all three of its business units recorded strong YoY bookings growth.
SMT Solutions Segment
The SMT Solutions Segment’s Q4 2020 revenue of HK$1.93 billion (US$249.3 million), representing growth of 1.4% YoY and 10.4% QoQ, was largely attributed to end-market demand for automotive, 5G infrastructure, and industrial applications. At the product level, there was continued strong demand for high-accuracy SMT systems (the Segment’s AP tools) for System-in-Package (SiP) applications. A highlight was the performance of the Segment’s equipment services and spare parts business, which experienced strong pickup in Q4 2020, indicating improving manufacturing activities among its customers, particularly the Eurozone and Americas.
Segment’s Q4 2020 bookings of HK$1.61 billion (US$208.0 million) represented YoY growth of 4.7% and QoQ decline of 9.1%. Notably, despite the QoQ decline in bookings, automotive customers registered a QoQ increase in new order bookings.
Materials Segment (Deconsolidated from 29 December 2020 onwards)
Several milestones were achieved by the Materials Segment this quarter. First, Q4 2020 Segment revenue of HK$608.4 million (US$78.5 million) was a record quarterly high, representing growth of 17.8% YoY and 1.0% QoQ. Second, Q4 2020 Segment bookings were also at an all-time quarterly high of HK$903.8 million (US$116.6 million), representing growth of 64.7% YoY and 75.3% QoQ. This bullish order momentum reflects robust semiconductor device demand, which will in turn drive customer demand for packaging and assembly equipment.
From 29 December 2020, the financial results of this Segment’s business have been deconsolidated and equity accounted for in the Group’s books, as part of a successful planned Strategic Joint Venture (SJV) with key partners announced in Q2 2020 and completed on schedule on 28 December 2020. The Group retains 44.44% ownership of the SJV, which is named Advanced Assembly Materials International Limited (“AAMI”). AAMI operates as an independent entity and continues to be of significant importance to the Group’s business.
“The Group ended 2020 on a positive note, with very decent foundations for the future. We look ahead with optimism at the broad-based semiconductor growth in 2021 market forecasts across various market applications. In the longer term, mega-trends from 5G innovation, HPC, and automotive electrification remain significant drivers that can sustainably fuel the Group’s performance for the next few years,” noted Mr. Ng.
The Group articulated a clear dividend policy for the future - to continue a consistent annual dividend payout ratio of around 50%, comparable to its average dividend payout ratio from 2011-2020. The actual dividend payout ratio for each year will depend on various factors, such as the Group’s strategy and financial performance, liquidity & financing needs, and the prevailing market outlook. The Board will also review this dividend policy from time to time, with reference to factors such as the Group’s future prospects and capital requirements.
Industry research forecasts for 2021 point to broad-based semiconductor growth, driven by overall accelerated digital transformation trends and a recovering automotive and industrial market.
Since the beginning of 2021, the Semiconductor Solutions Segment has experienced order intake momentum at an unprecedented pace, and consequently, Q1 2021 bookings for the Group are expected to surpass US$700 million. Improving global economic conditions, together with semiconductor inventory replenishments, have resulted in the tightening of global supply chain conditions. While the Group’s supply chain was impacted initially, the Semiconductor Solutions Segment is still expected to deliver strong QoQ revenue growth, offset by a QoQ seasonal decrease in SMT Solutions Segment revenue. Overall, in terms of revenue guidance for Q1 2021, the Group revenue is anticipated to range from US$500 million to US$550 million, which will be a Q1 quarterly revenue record (excluding revenue from the Materials Segment). The Group has aggressively ramped up its capacity to meet delivery commitments to customers over the coming quarters.
Beyond growing revenue, the need to ensure consistent and sustainable long-term profitability led the Group in 2020 to commission a comprehensive strategic review to significantly improve its market position and profitability for the future.
“A number of initiatives will be rolled out over the next few quarters across the Group that include streamlining and enhancing product portfolios, growing market share in both mid and high-end segments of the assembly equipment market, and improving product cost structures,” explained Mr. Ng. “We are confident that these will translate to consistently higher and sustainable long term Group profitability.”
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