Asmpt Ltd

Good morning and good evening everyone. I'm Romil from the investor relations team and I will be the moderator for today's call. On behalf of ASMPT Limited, let me welcome all of you to the group's investor conference call for the third quarter of 2024. We would like to sincerely thank you for your continued support and interest in the company. Please note that all participants will be on listen-only mode when the management is presenting. We will start the Q&A session only after the management has gone through the entire presentation. During the Q&A session, priority will be given to the covering analysts. As part of our standard disclaimer, please do note that during this conference call, there may be forward-looking statements with respect to the company's business and financial conditions. Such forward-looking statements could involve known and unknown uncertainties and risks that could cause actual results, performance, and events to differ materially from those expressed or implied during this conference call. For your reference, the investor relations presentation for our recent results is available on our website. On today's call, we have our Group Chief Executive Officer, Robin, and the Group Chief Financial Officer, KT. Robin will cover the Group's key highlights, outlook, and the guidance for the next quarter, while KT will provide details on the financial performance. With that, let me hand the time over to Robin now.

Thank you, Rom. Good morning and good evening to everyone today. It is a pleasure to have you all on our earnings conference call. for the third quarter of 2024. Before we go through the details of our business and financial performance, let me take this opportunity to give some highlights on the semiconductor industry. Recovery continues to be rather uneven for the overall semiconductor industry. At one end, non-AI related cyclical semiconductor demand is recovering at a slower pace than anticipated. This includes consumer, computer, and communication and market applications. In addition, automotive and industrial end markets continue to remain sluggish owing to ongoing inventory digestion. These trends continue to impact the group's semi-mainstream and SMT businesses. Let me provide some color here. Even though our semi-mainstream business had quarter-on-quarter bookings growth this quarter, we still feel that the order flow remained rather sporadic as it lacked the volumes that would reflect a broader base recovery. Overall, while our customer utilization rates have seen some improvement this quarter, these utilization rates are still not at levels that would trigger volume equipment orders. Looking at SMT, its overall market continued to experience softness with low booking levels. Despite this, our SMT business still maintained its leading market position this year. So that is a snapshot of the non-AI related cyclical semiconductor demand. At the other end of the spectrum, demand for generative AI was vigorous. driven by significant capital spending from major AI players globally. The accelerating adoption of AI continued to boost demand for advanced logic and memory pathogens applications. Against the rapid proliferation of this AI megatrend, our advanced packaging or AP solutions continue to benefit with AP bookings remaining robust this quarter. supported mostly by our thermal compression bonding or TCB and photonics solutions. I need to reiterate that our unique and broad-based portfolio continues to be an advantage for us. As the group businesses follow different cycles, a slowdown in one can be compensated for by momentum in the other. Moreover, as our AP and the mainstream businesses have different industry exposure, AP's strong momentum helps to partially mitigate the impact of weakness in mainstream. With that overview, let me now move to advanced pathogen solutions. It's worth re-emphasizing our firm belief that we have the industry's most comprehensive suite of AP solutions that serve a diverse range of applications. As I've mentioned, the group experienced strong demand fueled by high growth from generative AI and high performance computing application. And this demand was across multiple AP solutions in our portfolio. Let me share some highlights. First up is our star performer, our TCP solutions. TCP continue to make the highest contribution to both the group's AP bookings and AP revenue for this quarter. Looking at TCP for logic applications, we continue to win orders this quarter for chip-to-wafer application from a leading IDM customer. For our next generation Fluxus TCP that caters for ultra-fine-pitch chip-to-wafer logic applications, the joint development with our leading foundry customer is still ongoing. For chip-to-substrate applications, we continue to have a commanding position as we serve our leading foundry customer and its supply chain partner. There were many full TCB orders in this quarter from this leading foundry's OSEC partner. We have also commenced high volume shipment of our chip-to-substrate TCB2 to this OSEC customer this quarter. Lately, our TCB momentum intensified for high-bandwidth memory, or HBM, winning a number of TCB orders from several HBM players in this quarter. In October, we had a significant breakthrough, winning a bulk TCB order from a leading global HBM player. This volume order will cater to the customer's 12-hype demand ramp for HBM 3E and the TCB tools will be delivered in the coming quarters. These promising developments affirm our TCB leadership in HBM and position us well to partner with a wider range of customers for more order wins. Let me also provide some detail in our unique TCB capabilities that help secure these HBM order wins. You may recall that the last quarter we mentioned our TCB can handle thin memory die with thickness of less than 30 microns, and can deliver cheap gap requirements of below 10 microns. In addition to this, our TCB has capabilities that enable seamless upgrades to fluxless application for 12 height and beyond stacking requirements. Last but not least, our TCB can provide fungibility to handle different packaging processes, which include NCF and both flux-based or fluxless MUF. Next, let me touch on photonics as it continues to be another exciting area in our AP portfolio. After TCB, our photonics and silicon photonics solutions made the highest contribution to both AP bookings and revenue for this quarter under the semi-segment. Our market-leading photonics solutions continue to have meaningful order wins this quarter, in line with robust demand for 800G optical transceivers for data centers. Our silicon photonics solutions have the best in-class placement accuracy, and this saw order wins for high-end optical communication-related applications. We expect order momentum to continue forward for our photonics solutions. Lastly, a quick update on our hybrid bonding solution. This quarter, we mark an important milestone, shipping our first hybrid bonding tool to a Logic customer, and more shipments are scheduled in the coming quarters. We remain confident of winning more orders for our next generation hybrid bonders in the quarters ahead. With those highlights, let me now pass the time over to Kelly, who will talk about our group and segment performance.

Thank you, Robin. Good morning and good evening, everyone. Let me take you through the group's financials. This slide covers the group's key financial metrics for the third quarter of 2024. At the beginning of the quarter, we guided a revenue range of between 317 million and 430 million US dollars. The group delivered revenue at the high end of this guidance, and it was flat quarter on quarter and down year on year. While semi-register revenue growth during this quarter, SMT's revenue was adversely impacted by the ongoing market softness. Semi-revenue contribution to the group was also higher than SMT's in Q3. This demonstrates the advantage of our broad-based portfolio, as semi- and SMT segments follow different business cycles and provide some stability at the group level. While group bookings continued to grow year on year, it grew slightly quarter on quarter as well, mainly driven by semi and partially offset by softness in SMT. The group ended the quarter with a backlog of about $806 million. Backlog was done quarter on quarter as SMT continued to consume its backlog while there was growth for semi. Group gross margin improved on both quarter on quarter and year on year basis. Better gross margin coupled with stable operating expenses provided growth in the operating margin. Operating margin was 5.3% in the quarter and improved for both quarter-on-quarter and year-on-year. Adjusted net profit for the group was HK$29.5 million, and it was a decrease for both quarter-on-quarter and year-on-year. This decline is mainly driven by a foreign exchange loss of about HK$108 million. Excluding the forex change effects, adjusted net profit would be stable quarter on quarter, and would have increased by 73% year on year. The group continued to have a healthy balance sheet at the end of the third quarter, with cash and bank deposits at 5.47 billion Hong Kong dollars, while bank borrowings were at 2.58 billion Hong Kong dollars. Next slide, please. In the third quarter, Group revenue of $428.5 million was flat quarter-on-quarter and down by 3.7% year-on-year, as semi-register revenue growth while SMT's revenue declined. Group bookings of $406.1 million had a small increase quarter-on-quarter. Bookings were up 7.1% year-on-year, driven by semi and partially offset by softness in SMT. In case three, the group's book-to-bill ratio was at 0.95 and improved on both quarter-on-quarter and year-on-year basis. The group's gross margin was 41.0% for the quarter. It improved by 94 basis points quarter-on-quarter and by 683 basis points year-on-year. This significant year-on-year margin increase was driven by SEMI. Next slide. Semi-revenue of 229.4 million U.S. dollars increased to quote-unquote by 7.7%. It contributed a higher proportion to the group's Q3 revenue at about 53.5%. The IC discrete business unit had quote-unquote increase in revenue, mainly due to mainstream dibounders and y-bounders. Opto-electronics BU's revenue also increased to quote-unquote and was mainly driven by photonics-related applications. Revenue for CISBU declined quarter-on-quarter with lower revenue from high-end smartphone applications due to seasonality at its front end loaded in the first half of the year. Semi-bookings of $237.9 million were up by 7.0% quarter-on-quarter and were driven mainly by demand for mainstream Y-bonders and Y-bonders. AP bookings remained robust for the quarter. The book-to-bill ratio was 1.04 in Q3. It has remained above 1 since Q1 2024. It is also interesting to note that CEMI's quarterly bookings continue to show year-on-year improvements since Q4 2023. The bookings recorded strong year-on-year growth of 40.1% for this quarter, and it was mainly due to AP. The segment delivered a strong gross margin of 48.6% for the quarter, Gross margin increased by 406 basis points quarter on quarter. And it was mainly due to higher manufacturing utilization driven by TCB production ramp. This ramp is in line with the growing demand for our TCB solutions as Robin mentioned earlier. Next slide, please. For the third quarter, SMT's revenue was 199.2 million US dollars, a decline of 7.5% quarter on quarter. Bookings were at $168.2 million, down by 5.4% quarter-on-quarter. Both revenue and bookings continue to be adversely impacted by the ongoing softness in SMT's overall market. However, our SMT business maintained its leading market position this year. Segment growth margin of 32.3% was down 337 basis points quarter on quarter. The decline was mainly due to unfavorable product mix and volume effect. Next slide, please. As per the announcement made on October 23rd last week, the group has proposed to dispose of its stake in its strategic joint venture, Advanced Assembly Materials International Limited, or AAMI, Two, Shenzhen Original Advanced Compounds Co., Ltd., or SOAC. This disposal will be in consideration of new shares to be issued by SOAC and the remaining consideration in cash. SOAC is a company listed on the Shanghai Stock Exchange. Besides the immediate cash flow that the group would receive on completion, This proposed transaction may potentially create additional value for our shareholders, as the group would receive no less than 20% of the shares in SOAC, with further potential to grow its value in the semiconductor materials field. With that, let me now pass the time back to Robin for next quarter's revenue guidance.