ASMPT: OSAT and PCB Capex Form Dual Growth Engines, Target Price Raised to HK$248

Overview

This report is Morgan Stanley's preview and outlook for ASMPT Ltd's 2Q26 results. The core view is that capital expenditure from OSAT and PCB customers is expected to remain strong in 2026 and will independently support growth in ASMPT's Semiconductor Solutions and SMT businesses. The report sees AI-related demand, advanced packaging, CoWoS, Photonics, and CPO as themes that could drive a medium-to-long-term multiple expansion for the company.

Core views

The report reiterates an Overweight rating on ASMPT Ltd and raises the target price from HK$188 to HK$248. It argues that high OSAT utilization and rising prices, faster PCB expansion, and AI-driven demand for advanced packaging are the main near-term positives. At the same time, TCB demand is structurally divergent: logic-chip-related TCB orders remain strong, while HBM-related TCB order momentum is relatively weak.

Analysis framework

The report applies a bottom-up customer capex analysis, segment-level revenue forecasting, peer valuation comparison, and a residual income model for a comprehensive assessment. Key focus areas include OSAT capex, PCB capex, the B/B ratio, TCB order visibility, Photonics and CPO order visibility, hybrid bonding progress, and demand trends for SMT equipment from automotive and industrial customers.

Methodology notes

• Valuation methodsResidual income model

  Residual income valuation

  The HK$248 target price is derived from a residual income model, with key assumptions including 9.2% cost of equity, 14.5% mid-term growth rate, and 3.5% terminal growth rate.

• financial_modelMorgan Stanley ModelWare

  Earnings forecasting framework

  Unless stated otherwise, financial metrics in the report are based on Morgan Stanley's ModelWare framework.

• relative_valuationP/E peer comparison

  Peer P/E comparison

  The report notes ASMPT at roughly 30x 2027e P/E is below Besi at 35x and Hanmi at 43x, suggesting valuation remains attractive.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• ASMPT Ltd (0522.HK / 522 HK)

  Core coverage name

  Strengths

  Benefits from OSAT and PCB capex growth, AI-related demand, advanced packaging, exclusive on-substrate CoWoS-L TCB supply position, and SMT demand recovery.

  Weaknesses

  HBM-related TCB equipment order momentum is weaker, mainstream semiconductor demand may remain soft, and automotive and industrial demand still requires monitoring.

  Comparison

  The report argues ASMPT's 2027e P/E is below Besi and Hanmi, indicating relative valuation appeal.

  Risks

  Global economic and semiconductor growth below expectations, slower OSAT expansion in China, no progress in hybrid bonding tools, and weaker back-end equipment demand.

• OSAT value chain

  Demand driver

  Strengths

  High utilization and price increases support capex expansion, with 2026 capex expected to grow 45%.

  Weaknesses

  If Chinese OSAT demand weakens and capacity expansion pauses, ASMPT's order and revenue momentum would weaken.

  Comparison

  Relative to prior assumptions, projected OSAT capex growth was raised from 34% to 45%.

  Risks

  Packaging and testing cycle slowdown, delayed customer capex timing, and slower-than-expected adoption of advanced packaging.

• PCB value chain

  Driver for SMT business

  Strengths

  AI demand is driving PCB players to expand capacity, with 2026 capex expected to grow around 69%; historically, PCB capex has been highly correlated with ASMPT SMT revenue growth.

  Weaknesses

  SMT business remains exposed to automotive and industrial demand cycles.

  Comparison

  PCB capex transmission to ASMPT SMT revenue is one of the report's so-called "dual growth engines."

  Risks

  AI server or high-end PCB demand decelerates, and terminal demand recovery outside AI stays weaker than expected.

Key data

• Target priceHK$248.00Raised by 32% from HK$188, used as the base-case valuation.
• RatingOverweightMorgan Stanley reaffirms the rating, with an Attractive sector view.
• Implied upside21%Based on the report's stated current price of HK$204.80 and target price of HK$248.00.
• Projected 2026 OSAT capex growth45%Revised up from 34% in the 1Q26 preview; expected to be the third consecutive year of growth.
• Projected 2026 PCB capex growtharound 69%Primarily driven by stronger AI demand.
• Revised 2026/2027/2028 EPS outlook7% / 10% / 10%Reflects stronger growth in Semiconductor Solutions and SMT businesses.
• 2026 revenue estimateHK$18,293mnMorgan Stanley forecast listed in the financial summary.
• 2027 EPS estimateHK$6.76ModelWare EPS as stated in the report.
• Base-case valuation multiple37x 2027e P/EThe report says the stock could re-rate to about 37x 2027e EPS on the back of long-term AI growth.

Impact & implications

For investors, the report positions ASMPT as a beneficiary of the AI-driven advanced packaging and PCB expansion cycle. Near-term catalysts include 2Q26 results, 3Q26 revenue outlook, order flow, and the B/B ratio; medium-to-long-term upside is linked to CoWoS, TCB, Photonics, CPO, and hybrid bonding. Key uncertainties include slowing HBM-related TCB orders, semiconductor cycle weakness, weaker-than-expected recovery in automotive and industrial demand, and slower-than-expected progress in hybrid bonding.

Risks

• Global economy and semiconductor industry growth slower than expected.
• Weaker demand from Chinese OSAT players and a pause in expansion.
• No technological breakthrough in hybrid bonding tools.
• HBM-related TCB order momentum remains relatively weak.
• Back-end equipment demand weakens, with potential drag on SMT business.
• Morgan Stanley is acting as ASMPT's exclusive financial advisor on strategic options for the SMT Solutions Segment, and the report discloses a potential conflict of interest.

What to watch

• 2Q26 results and 3Q26 revenue guidance, particularly the report's expected 3Q26 revenue growth of 9% quarter-on-quarter and 34% year-on-year.
• Whether the B/B ratio shows upside surprise and its impact on consensus EPS over the next 12 months.
• Progress in securing HBM and logic TCB orders, especially chip-to-wafer-related TCB orders.
• Momentum in Photonics orders and visibility of CPO-related tool orders.
• New CEO appointment, management updates, and progress on planned business carve-outs.
• Progress on hybrid bonding technology breakthroughs.
• Demand trends for SMT equipment from automotive and industrial customers.