ASE Technology Holding Co., Ltd. - Q4 2021 Earnings Summary
Business Context and Reporting Period
This Form 6-K filing, dated February 10, 2022, reports the Fourth Quarter and Full Year 2021 unaudited financial results for ASE Technology Holding Co., Ltd., a leading provider of outsourced semiconductor packaging, testing, and electronic manufacturing services (EMS). The reporting period covers the quarter ended December 31, 2021, and the fiscal year ended December 31, 2021.
Key Financial Metrics
| Metric | Q4 2021 | Q3 2021 | Q4 2020 | FY 2021 | FY 2020 |
|---|---|---|---|---|---|
| Total Net Revenues (NT$ Million) | 172,936 | 150,665 | 148,877 | 569,997 | 476,978 |
| Gross Profit Margin | 19.0% | 20.4% | 15.6% | 19.4% | 16.3% |
| Operating Income (NT$ Million) | 19,615 | 18,426 | 11,246 | 62,125 | 34,877 |
| Operating Margin | 11.3% | 12.2% | 7.6% | 10.9% | 7.3% |
| Net Income to Shareholders (NT$ Million) | 30,916 | 14,176 | 10,044 | 63,908 | 27,593 |
| Diluted EPS (NT$) | 6.99 | 3.20 | 2.30 | 14.40 | 6.31 |
| Cash and Equivalents (NT$ Million) | 76,073 | 53,419 | - | - | - |
| Total Interest Bearing Debt (NT$ Million) | 227,176 | 235,326 | - | - | - |
| Net Debt to Equity Ratio | 0.54 | 0.71 | - | - | - |
Note: Q4 2021 results include a significant non-operating gain of approximately NT$17.7 billion related to the disposal of four China sites.
Material Changes vs. Prior Period
- Revenue Growth: Q4 2021 consolidated revenues increased 15% quarter-over-quarter (QoQ) and 16% year-over-year (YoY). Full-year 2021 revenues grew 20% YoY.
- Profitability Surge: Q4 2021 Net Income attributable to shareholders surged 118% QoQ and 208% YoY. This was driven by operational improvements and a one-time gain from asset disposals.
- Segment Performance:
- ATM (Assembly & Test): Q4 revenues grew 2% QoQ and 31% YoY. Gross margin improved to 28.0% (22.6% in Q4 2020).
- EMS (Electronic Manufacturing Services): Q4 revenues grew 33% QoQ and 3% YoY. Gross margin was 8.7%.
- Balance Sheet: Cash and cash equivalents increased significantly to NT$76.1 billion from NT$53.4 billion in Q3 2021, largely due to the China site disposals. Total interest-bearing debt decreased to NT$227.2 billion.
Guidance, Outlook, and Risks
- 2022 Outlook: Management expects revenues and margins to continue improving in 2022. They project ATM revenue growth to be 2x the logic semiconductor industry growth (estimated 5-10% YoY), driven by market share gains and IDM outsourcing.
- Margin Targets: 2022 ATM gross and operating margins are expected to surpass historical peak levels set in 2014 (27.0% and 16.6%, respectively).
- Q1 2022 Guidance: On a pro forma basis, Q1 2022 ATM business is projected to be down 4% vs. Q4 2021 due to fewer working days and SiP seasonality. EMS business is expected to be similar to the 2021 quarterly average.
- China Site Disposals: The company closed the sale of four China sites for US$1.46 billion in December 2021. These sites represented 7.6% of ATM revenues and 4.5% of consolidated revenues in 2021.
- Risks: Forward-looking statements are subject to risks including semiconductor industry cyclicality, regulatory changes, geopolitical tensions (specifically between ROC and PRC), US trade policy shifts, and potential disruptions from natural disasters or pandemics.
Investor Verification Checklist
- One-Time Gains: Verify the impact of the NT$17.7 billion non-operating gain from China site disposals on Q4 2021 Pretax Income and Net Income.
- Pro Forma Adjustments: Review the pro forma financial data (Appendix 1 & 2) which excludes the disposed China sites to understand the underlying organic performance.
- PPA Expenses: Note the significant Purchase Price Allocation (PPA) expenses (approx. NT$1.2 billion in Q4 2021) related to the SPIL and USI/Asteelflash transactions that reduce reported margins.
- Currency Impact: Monitor foreign exchange rate fluctuations (NTD/USD) as the company reports in NT$ but provides USD outlooks.
- Capital Expenditure: Confirm the alignment of Capex (US$1.87 billion in Q4 2021) with the stated strategy of expanding capacity for HPC, automotive, and 5G applications.