ASM Pacific Technology posts 40.4 per cent fall in net profit

Hong Kong-listed ASM Pacific Technology, the top global supplier of semiconductor assembly and packaging equipment by revenue, predicts a moderate improvement in the industry this year after posting a 40.4 per cent drop in net profit last year.

In a regulatory filing on Wednesday, ASM Pacific chief executive Lee Wai-kwong said the company was “encouraged by the rebound in bookings” in the three months to December.

“This probably confirms ... that the current [slow] industry cycle should be shallow and a short one,” Lee said. “Overall, we believe that we will again demonstrate our resilience in 2016.”

ASM Pacific, which is 40 per cent-owned by Nasdaq-traded ASM International, reported a net profit of HK$952.9 million last year, down from HK$1.6 billion in 2014.

Jefferies equity analyst Ken Hui said the weak profit was caused by ASM Pacific’s higher operating costs, tax expenses and non-operating losses from activities outside its core business.

Total revenue for ASM Pacific last year declined 8.8 per cent to HK$12.9 billion from HK$14.2 billion in 2014.

“Unfavourable macroeconomic conditions, such as a slowdown in China’s growth, a weak stock market and a much slower pace of growth in smartphones, seem to have dented business confidence and discouraged investment,” Lee said. “However, we did notice that confidence seemed to have been restored to a certain extent towards the end of the year.”

Manufacturing customers in China, including Hong Kong, contributed 48.2 per cent of ASM Pacific’s total revenue last year. The company’s other major markets were Europe, the Americas, Malaysia and Japan.

Its top 20 customers included semiconductor makers, outsourced chip assembly and test services providers, light-emitting diode makers, contract electronics manufacturers and automotive component suppliers.

“With the industry recovery, ASM Pacific guides for its first-quarter revenue this year to be sequentially flat to slightly better,” Jefferies’ Hui said.

Technology research firm Gartner has forecast worldwide semiconductor capital spending to decrease 4.7 per cent to US$59.4 billion this year, down from US$62.3 billion last year.

“Capital investment policies of leading semiconductor vendors have remained cautious against the background of sluggish electronics demand,” Gartner senior research analyst David Christensen said in a report last month. He added that the “long-term outlook shows a return to growth, although the wafer-level manufacturing equipment market is expected to enter a gentle down cycle in 2016”.

ASM Pacific shares rose 0.08 per cent to HK$61.55 on Wednesday.