ASE Technology Holding Co., Ltd. - 1Q24 Financial Summary
Business Context and Reporting Period
This Form 6-K filing reports the unaudited consolidated financial results for ASE Technology Holding Co., Ltd. (ASEH) for the first quarter ended March 31, 2024. ASEH is a leading provider of semiconductor assembly and testing (ATM) and electronic manufacturing services (EMS). The results are prepared in accordance with Taiwan-IFRS.
Key Financial Metrics
| Metric | 1Q24 | 4Q23 | 1Q23 |
|---|---|---|---|
| Net Revenues | NT$132,803 million | NT$160,581 million | NT$130,891 million |
| Net Income (Parent) | NT$5,682 million | NT$9,392 million | NT$5,817 million |
| Basic EPS | NT$1.32 (US$0.084/ADS) | NT$2.18 | NT$1.36 |
| Diluted EPS | NT$1.28 (US$0.082/ADS) | NT$2.13 | NT$1.30 |
| Gross Margin | 15.7% | 16.0% | 14.8% |
| Operating Margin | 5.7% | 7.4% | 5.9% |
| EBITDA | NT$23,974 million | NT$28,606 million | NT$23,765 million |
| Cash & Equivalents | NT$75,105 million | NT$67,284 million | NT$62,056 million |
| Current Ratio | 1.19 | 1.18 | N/A |
| Net Debt to Equity | 0.36 | 0.38 | N/A |
Material Changes vs. Prior Periods
- Revenue: Consolidated revenue increased 1.5% year-over-year (YoY) but declined 17.3% sequentially (QoQ).
- ATM Segment: Revenue up 0.8% YoY, down 9.9% QoQ. Gross margin compressed 2.4 percentage points to 21.0% due to lower utilization and mix shifts.
- EMS Segment: Revenue up 2.8% YoY, down 25.0% QoQ. Gross margin improved 0.9 percentage points to 9.3%.
- Profitability: Net income attributable to shareholders decreased 2.3% YoY and 39.5% QoQ. Operating income dropped significantly QoQ due to lower revenue and margin compression in the ATM segment.
- Non-Operating Items: A net foreign exchange loss of NT$3,219 million (driven by USD appreciation against TWD) negatively impacted results, partially offset by a net gain on valuation of financial assets of NT$4,098 million.
- Cost Structure: Cost of revenues decreased QoQ to NT$111,935 million. Raw material costs represented 50% of total revenue.
Outlook, Risks, and Commentary
- Capital Expenditures: 1Q24 CapEx totaled US$228 million (US$109m for packaging, US$97m for testing, US$21m for EMS).
- Liquidity: Total unused credit lines amounted to NT$393,886 million as of March 31, 2024. Cash flow from operations was NT$16,694 million.
- Customer Concentration: The top 5 customers accounted for 46% of total revenue (ATM) and 67% of EMS revenue. The top 10 customers contributed 61% of total revenue.
- Risks: Management highlights risks related to semiconductor cyclicality, geopolitical tensions (ROC vs. PRC), US trade policy shifts, foreign exchange fluctuations, and environmental regulations. Forward-looking statements are subject to these uncertainties.
Investor Verification Checklist
- FX Impact: Verify the sensitivity of future earnings to USD/TWD exchange rate fluctuations given the significant Q1 loss.
- ATM Margin Pressure: Assess the sustainability of the 21.0% ATM gross margin and the drivers behind the 2.4 percentage point sequential decline.
- Customer Concentration: Review the specific identity and health of the top 5 customers, who represent nearly half of total revenue.
- Seasonality: Confirm if the 17.3% sequential revenue drop aligns with historical seasonal patterns or indicates a broader demand softness.
- Debt Profile: Monitor the net debt to equity ratio (0.36) and interest expense coverage given the NT$1,107 million net interest expense.