On Wednesday afternoon Beijing time, Dutch lithography machine manufacturer Asma released an overall slightly better than expected Q4 2023 report and maintained a cautiously optimistic outlook.
According to financial report data, Asma achieved a revenue of 7.2 billion euros and a net profit of 2 billion euros in the fourth quarter of last year; The net increase in order volume surged to a record high of 9.2 billion euros (including 5.6 billion euros in orders for extreme ultraviolet lithography machines). All data slightly exceeded the company's guidelines and market expectations. Throughout the 2023 fiscal year, Asma achieved a revenue of 27.5 billion euros (YoY+30.16%) and a net profit of 7.8 billion euros (YoY+39.38%).
(Source: Asma Financial Reporting Documents)
With the latest round of gains in the world's cutting-edge semiconductor sector since the New Year, Asma's stocks on the Pan European Exchange and NASDAQ Exchange have also risen to a new high in nearly two years, surpassing Nestle in market value and rising to third place in Europe. From the K-line chart, the historical high is only one step away.
(ASML European Stock Weekly Chart, Source: Trading View)
Outlook: Stable in 2024 and explosive in 2025
Asma expects its revenue to be between 5-5.5 billion euros in the first quarter of this year, with a gross profit margin ranging from 48% to 49%. The company still maintains a conservative view on the performance for 2024, that is, the revenue for fiscal year 2024 should be similar to last year. Company head Wen Ningke also stated that this year will be an important year for expanding production capacity in anticipation of significant growth in 2025.
(Source: ASML)
For medium - and long-term guidance, Asma still maintains the growth model shown by the end of 2022- the revenue for fiscal year 2025 will reach 30-40 billion euros, with a gross profit margin ranging from 54% to 56%; By 2030, the revenue will reach 44 to 60 billion euros, with a gross profit margin ranging from 56% to 60%. Part of the reason for the "first decline followed by an increase" in gross profit margin is that the company needs to invest in expanding the production capacity of high aperture (NA) lithography machines this year, and these products will significantly increase their revenue share in 2025.
(ASML delivers the world's first high aperture extreme ultraviolet lithography machine to Intel)
Asma also thoughtfully illustrated that in the history of the global semiconductor market, there has always been a trough before significant revenue growth across the industry, so everyone needs to be prepared.
(Semiconductor market revenue growth rate, source: Asma)
Asma CEO Wenning Ke also stated that the company's downstream customers are experiencing a downward cycle in the industry, and now everyone knows that the recovery cycle is there. However, there is still significant uncertainty about the specific speed and form of the recovery.
Wen Ningke also stated that several positive signals have been observed now, such as a significant improvement in inventory levels among end-users compared to previous quarters; The utilization rate of Asma equipment, although not yet at the so-called normal level, is clearly on the rise, and the company also expects this growth to run through 2024. Finally, the orders of 9.2 billion euros in the fourth quarter are also a very clear positive signal.
However, he emphasized that although there are many positive signals, due to many uncertainties, the company still maintains its existing guidelines.
There is a strong demand in the Chinese market
According to Asma's financial report, in 2023, the revenue from China, especially in Chinese Mainland, will increase rapidly, offsetting the impact of the decrease in revenue of customers in other regions in the semiconductor downward cycle. According to financial report data, the revenue of the entire China region has risen to 59% of Asma's total revenue. The proportion of revenue in Chinese Mainland doubled from 14% in 2022 to 29%.
From a geopolitical macro perspective, the uncertainty of factors such as China US relations has also driven many Chinese customers to accelerate their orders to Asma.
Wen Ningke revealed that the demand from Chinese customers is very strong, and the confirmed revenue in 2023 is actually mostly orders that have already been queued by the end of 2022. In fact, the completion rate of orders in China has always been very low, averaging less than 50% in the past few years. So when there is a shift in demand from customers in other regions, the company has more capabilities to meet the needs of Chinese customers.
Wen Ningke emphasized that the demand of Chinese customers will be strong in 2023, and will continue to be strong this year and even in the future.
(Source: ASML)
As for the export control orders from the United States and the Netherlands, Wenningke stated that he has received confirmation from relevant parties that the company will not be able to export advanced immersion lithography machines, namely NXT: 2000i or more advanced equipment, to restricted areas. At the same time, some wafer fabs may not be able to obtain export licenses for NXT: 1970i and NXT: 1980i.
In terms of specific impact, Winningke took the revenue in 2023 as an example and said that about 10% -15% of the sales in Chinese Mainland would be within the theoretical impact of the new regulations.