UBS: Raises ASMPT (00522) target price to HK$135 Potential divestment of SMT business is positive

UBS released a research report stating that due to the improvement in growth visibility of the Thermo-Compression Bonding (TCB) business, the earnings forecast for ASMPT (00522) for the current and next year have been raised by 3% and 4% respectively. The valuation basis has been extended to 2027, with a forecasted P/E ratio of 24 times, and the target price has been raised from HK$95 to HK$135, with a "Buy" rating. ASMPT announced that it is evaluating options for its Surface Mount Technology (SMT) business, which may involve selling, partnering, spinning off, or listing. UBS believes that this move is positive as the company can focus on semiconductor and advanced packaging, streamlining operations and resource allocation. The SMT business traditionally has lower profit margins and technology barriers compared to the semiconductor industry, with different industry cycles. If ASMPT chooses to divest or spin off the SMT business, due to opportunities in advanced packaging, profit margin and earnings are expected to structurally increase, leading to potential revaluation. The bank currently trades at a P/E ratio of 18 times for the forecasted 2027, lower than international peers.