BOCOM International Research lifted its target price for ASM Pacific Technology (00522) to HK$125 from HK$120 and maintained its "buy" rating.
ASM guided to 1Q 2021 bookings of >US$700m (up >20%) on "unprecedented" semis solution demand, whereas SMT bookings will drop seasonally in 1Q. The research house expects growth in higher-end products to help offset the potential GPM dilution from the strong wire bond/die bonder outlook.
Following the divestment of the materials business, ASM's strategic initiative to cut off legacy low-margin/low-volume businesses should help improve its longer-term GPM outlook. Given the current semis supply shortage, BOCOM believes SMT orders have the potential to see stronger growth in 2H 2021, once the semi supply shortage eases, as stronger demand flows downstream.
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