ASMPT’s 1Q25 revenue is line with mid-point guidance and GPM was up 3.7ppts QoQ thanks to better product mix especially AP and TCB.
　　Net income was HK$84m, a small beat to consensus. ASMPT’s TCB gains traction as it won another global HBM customer, which solidifies its technology leadership in HBM4. Key potential 2025 AP catalyst is the progress of fluxless TCB tool qualification with global leading foundry. While the SMT drag on over recovery momentum remains, we expect ASMPT to be a near-term tariff war beneficiary driven by rush orders ahead of the 90-day tariff pause and the new relocation capex.
　　With ASMPT currently trading at 13x 2026E P/E, we reiterate BUY with attractive risk-reward profile. Lower TP from HK$98 to HK$81.
　　Key Factors for Rating
　　1Q25 margin rebound: Revenue was flat YoY at HK$3.1bn, at the mid-point of preview guidance. GPM increased by 3.7ppts QoQ to 40.9% mainly driven by better SEMI and SMT product mix, especially AP and TCB. OPM was up 5ppts YoY thanks to better GPM and restructuring, though offset by elevated R&D investment. Owing to FX loss of HK$34m, NI was HK$84m (-54% YoY) but still beat consensus by 27%. SEMI B/B was at 0.87 with strong AP billings in 1Q25; SMT B/B was at 1.43 driven by seasonal SiP order.
　　Mixed 2Q25 outlook: 2Q25 revenue guidance of US$410-470m is up 10% by mid- point, below market by 6%. In 2Q25, mgmt. sees 1) AP momentum continues with second HBM TCB client ramping up delivery, 2) SEMI mainstream demand rebounds though industrial and automotive demand in EU and US is still soft; 3) potential opportunities from rush orders to take advantages of the 90-day tariff pause; 4) STM demand rebound from emerging AI server and China automotive market.
　　Tariff war may be a near-term positive: Mgmt. does not see material impact on operations and does not have order cancellation but as clients keep evaluating the new tariff strategy, visibility reduces. Apart from near-term rush orders to avoid tariff uncertainty, Company expects certain new capex opportunities from North America or other regions with a lower reciprocal tariff rate, where some of its clients are considering relocating manufacturing capacity to.
　　TCB on track gaining new orders: TCB order and shipment flow remain strong. While first HBM client completes previous bulk orders, ASMPT secured a new HBM client in 1Q25 with initial orders in 1Q25 and more new orders in April 2025. In particular, the new orders are for HBM4, which is an industry leading solution solidifying ASMPT’s TCB technology leadership. ASMPT is progressing well in leading foundry’s second generation C2W fluxless TCB qualification and pilot production and is confident to win such orders over 2025-26.
　　Key Risks for Rating
　　Slowdown in GenAI demand; soft macro and geopolitical uncertainty; weaker- than-expected automotive and industrial demand; global fab capex slowdown.
　　Valuation
　　We increase SMEI revenue estimate by 1% to factor in decent AP growth but lower SMT revenues by -14% to reflect soft non-AI growth over 2025-27. Thanks to better product mix, we expect group GPM to stay well above 40% but lower NI forecasts by 25%/4%/2% to reflect SMT dragging operating leverage. We use 20x 2026E EPS to value ASMPT. Maintain BUY with a revised TP at HK$81 (previously HK$98).