The Zhitong Finance App learned that J.P. Morgan maintained an “increase” rating on Dutch semiconductor equipment manufacturer ASM International (ASMIY.US) in the latest research report, with a target price of 1,174 euros. The bank believes that the biggest highlight of ASMI's three-quarter report is not the current season data, but rather that the company “unexpectedly” gave guidance for the 2027 fiscal year before the fourth quarter began — this is the first time in its history that the next fiscal year's performance was predicted in advance.
According to Xiaomo, this rare move sends two key signals: first, the company has “very strong” visibility into future orders; second, given ASMI's always cautious guidance style, the numbers given in advance are likely to be conservative, and there is room for improvement in the future. Based on this, the bank determined that the guidance would push the market to revise ASMI's profit forecast for the 2027 fiscal year by a “low double digit percentage,” and it is expected that the company will continue to reaffirm the goal of “outperforming the growth rate of the global fab equipment (WFE) industry” — although its 34% revenue growth rate is slightly lower than J.P. Morgan Chase's forecast for a 38% increase in WFE spending in 2027.
J.P. Morgan's confidence is rooted in its judgment on ASMI's competitive position. The bank's analyst Sandeep Deshpande pointed out in the report that ASMI already dominates the logic chip market for atomic layer deposition (ALD) devices, and the world's major advanced process manufacturers have used its equipment in 5 nm, 3 nm, and 2 nm processes; more importantly, the structural dividends brought about by technological evolution.
The number and complexity of ALD and epitaxial (Epi) processes will continue to increase as DRAM steering logic's high dielectric constant metal grid and 4F2 architecture and logic chips advance backside power supply networks and 1.4 nm nodes. This is the underlying logic that ASMI can outperform the growth rate of the WFE industry for a long time. In addition, the bank also noted the significant expansion of ASMI's share in the epitaxial equipment market over the past four years, as well as an improvement in its position in the storage market.
ASMI's third-quarter revenue of 1.16 billion euros and EBIT of 387 million euros both exceeded expectations. The gross profit margin was 52% higher than the agreed forecast of 81 basis points, and growth was driven by advanced logic/foundry acceleration, 1.4 nm first contribution revenue, and strong storage growth. The structural quality was high.
At the same time, Xiaomo suggested that the company's current market consensus forecast of 51.1% gross profit margin for FY2027 “seems wrong” — under the guidance of a sharp increase in revenue, the fixed cost dilution effect will drive gross margin to at least slightly higher than the guideline level of 52% in FY2026, which means that the profit increase may exceed the market's imagination.
Valuation level: While raising the 2028 profit forecast, the bank actively lowered the valuation ratio from 32.8 times to 28.5 times, on the grounds that “the forecast has begun to reflect upward space.” This combination of “increasing profits and lowering multiples” actually leaves a margin of safety for opinions.