ASM PACIFIC:2Q NI +4%YoY,3Q rev guided -1%~+7%YoY

Event

2Q18net income +4% YoY: Revenue was in-line with our/street’s estimates,and GM of 43.2% (vs 37.6%/41.0% in 1Q18/2Q17) was higher than our/streetestimates of 39.7%/40.6%. Net income came in at HK$784m, 4% lower thanconsensus due to higher tax rate. Interim dividend at HK$1.3.· 3Q18guidance: ASMPT guides 3Q18revenue at US$650~700m, implyingdown 1% to up 7% YoY (vs our/street’s estimates of +11%/+8% YoY). GM isguided to decline 1.5~3% QoQ (vs 43.2% in 2Q18) to 40.2~41.7%, vsour/street’s 39.7%/40.5%. Booking is guided to down QoQ due to seasonality.

Impact

Revenue in-line: Revenue of HK$5.3bn (+21% QoQ, +19% YoY) was in-linewith our/street’s estimates of HK$5.3bn and company guidance. Backend/Material/ SMT segment revenue grew 18%/7%/26% YoY, respectively.

GM at 43.2% (vs 37.6%/41.0% in 1Q18/2Q17) was higher than our/streetestimates of 39.7%/40.6%. GM of Backend/ Material/ SMT segment was+278bps/ +32bps/ +115bps YoY, respectively.

OPM at 22.4% (vs. 16.0%/20.6% in 1Q18/2Q17) was higher than our/street’s18.7%/19.2%, with opex ratio at 20.9% (vs. 21.6%/21.0% in 1Q18/2Q17). OPwas 21%/15% higher than our/street’s estimates.

Non-Op loss was HK$53m (vs +HK$15m/-HK$38m in 1Q18/2Q17).

Net income +4% YoY: Net income of HK$784m (+27% QoQ, +4% YoY) was4% lower than consensus due to higher tax rate (31% in 2Q18vs street’sestimate of 18%).

BB ratio at 1.08, booking +10% YoY: BB ratio was 1.08in 2Q18(vs1.36/1.17in 1Q18/2Q17). New order bookings was US$728m (-4% QoQ,+10% YoY).

Interim dividend at HK$1.3, implying 38% payout ratio.

Action and recommendation

Maintain Outperform. Our estimates are under review.