Advanced packaging trends driven by AI support elevated order levels, but fair valuation keeps the rating at Neutral

Overview

This report is a company research update from Goldman Sachs on ASMPT (0522.HK). The core view is that AI applications are driving demand for computing power, boosting orders for advanced packaging, TCB tools and photonics tools, and supporting a recovery in ASMPT's SEMI and SMT businesses in 2026; however, from a valuation perspective, Goldman Sachs believes the share price already largely reflects the long-term opportunity and therefore maintains a Neutral rating.

Core views

The report's core views include: first, 3Q26 orders are expected to remain elevated and grow by a high-single-digit percentage sequentially; second, AI infrastructure demand is the primary driver of growth in TCB and photonics tools, including CPO, HBM, high-end CPUs and migration toward advanced packaging technologies; third, 2026E revenue and gross margin are raised while the expense ratio is lowered, but net profit forecasts are broadly unchanged; fourth, the target price is lowered to HK$177, mainly reflecting updated valuation framework and assumptions.

Analysis framework

Goldman Sachs revises ASMPT's earnings forecasts and values its 12-month target price based on 2Q26 results, 1Q26/2Q26 order growth, management's outlook for 3Q26 orders, AI-related end-market demand, advanced packaging technology migration, recovery trends in the SEMI and SMT businesses, and the relationship between peer P/E multiples, earnings growth and operating margins.

Methodology notes

• Valuation methods2030E discounted P/E

  Determine the target P/E based on long-term earnings power and peer valuation relationships, then discount it back to a nearer-term year.

  Goldman Sachs uses a 24.9x 2030E target P/E and discounts it back to 2027E at an 11% cost of equity to derive a 12-month target price of HK$177; the target multiple is derived from the relationship between peer P/E multiples and the sum of future net profit growth and operating margin.

• Earnings forecastEarnings revisions

  Adjust revenue, gross margin, expense ratio and net profit forecasts based on 2Q26 performance, revenue scale and operating efficiency.

  The report raises 2026E revenue and gross margin and lowers the expense ratio due to greater revenue scale and improved operating efficiency, but a higher-than-expected 2Q26 tax rate and the impact of discontinued operations leave 2026E net profit broadly unchanged.

• Risk frameworkUpside and downside risk analysis

  Assess the risk of deviation from the target price and rating based on the pace of advanced packaging adoption, automotive customer demand, and traditional IC packaging and SMT equipment demand.

  Faster-than-expected customer adoption of advanced packaging tools, stronger automotive customer demand, or better traditional IC packaging/SMT equipment demand could create upside; the opposite would constitute downside.

• Investment factorGS Factor Profile

  Compare the stock with the market and industry peers across four attribute categories: Growth, Financial Returns, Multiple and Integrated.

  Goldman Sachs discloses that its factor framework uses forward sales, EBITDA and EPS growth; ROE, ROCE and CROCI; and P/E, P/B and EV/EBITDA, among other metrics, to form percentile comparisons.

Asset mapping & comparison

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

• ASMPT (0522.HK)

  Covered company, directly benefiting from AI-related demand for advanced packaging and photonics tools.

  Strengths

  TCB and photonics tools are driven by demand for AI computing power, CPO, HBM and high-end CPUs; SEMI and SMT businesses are expected to grow in 2026; orders remain elevated.

  Weaknesses

  Valuation is considered fair; 2026E net profit is broadly unchanged due to a higher tax rate and the impact of discontinued operations; lead times for some materials are lengthy.

  Comparison

  The target multiple references the relationship between peer P/E multiples, earnings growth and operating margins. Companies disclosed in the report for comparison include Applied Materials, Accotest, LAM Research, Tokyo Electron, KLA and Piotech, among others.

  Risks

  The pace of advanced packaging tool adoption, automotive customer demand, and traditional IC packaging and SMT equipment demand could all affect orders, revenue and valuation.

Key data

• 3Q26 order outlookHigh-single-digit sequential growthManagement expects 3Q26 orders to continue growing after orders increased 45% and 24% sequentially in 1Q26 and 2Q26, respectively.
• 1Q26 order growth+45% QoQThe report states that 1Q26 bookings increased 45% sequentially.
• 2Q26 order growth+24% QoQThe report states that 2Q26 bookings increased 24% sequentially.
• 2Q26 BB ratio1.43The chart shows ASMPT's 2Q26 BB ratio at 1.43, unchanged from 1Q26.
• 12-month target priceHK$177The previous target price was HK$206; following this update, it is HK$177.
• Target P/E multiple24.9x 2030E discounted P/EThe target multiple is based on the relationship between peer P/E multiples and the sum of future net profit growth and operating margin.
• Discounting assumptionCOE 11%Goldman Sachs discounts the 2030E target P/E back to 2027E.
• Implied 2027E P/E31xThe new target price implies a 2027E P/E of approximately 31x, around the company's historical average plus one standard deviation.
• 2031E net profit growth23%The company's NI YoY assumption used in the valuation correlation.
• 2031E operating margin18%The OPM assumption used in the valuation correlation.

Impact & implications

The report's investment implication for ASMPT is broadly neutral: fundamentally, AI-driven demand for advanced packaging, CPO, high-end CPUs and HBM is expected to support orders for TCB and photonics tools and drive growth in the SEMI and SMT businesses in 2026; from a valuation perspective, although the target price offers upside to the disclosed price, Goldman Sachs believes the valuation is already fairly valued and therefore does not upgrade the rating.

Risks

• Customers adopt advanced packaging tools more slowly than expected.
• Automotive customer demand is weaker than expected.
• Traditional IC packaging and SMT equipment demand is weaker than expected.
• Long lead times for some materials could affect delivery schedules.
• A higher tax rate and the impact of discontinued operations could weigh on net profit performance.

What to watch

• Whether 3Q26 orders achieve high-single-digit sequential growth.
• The sustainability of TCB and photonics tool orders amid AI-related demand.
• The pace of CPO adoption in data centers.
• The extent to which high-end CPU and HBM demand drives advanced packaging equipment.
• Progress in Chinese OSAT manufacturers' migration toward advanced packaging.
• The magnitude of revenue recovery in the SEMI and SMT businesses in 2026.
• The actual impact of gross margin, expense ratio and tax rate on net profit.