ASE Technology (ASX) Q3 2019 earnings summary

Executive summary

• Q3 revenue was NT$117,557M, up 30% QoQ and 9% YoY; diluted EPS was NT$1.33.

• Net income attributable to shareholders was NT$5,734M, down 8% YoY; gross and operating margins improved QoQ to 16.3% and 7.1%.

Financial highlights

• Gross profit was NT$19,108M, up 37% QoQ and 4% YoY; operating income was NT$8,385M, up 102% QoQ and flat YoY.

• Excluding PPA expenses, gross margin was 17.3%, operating margin 8.4%, net income attributable to shareholders NT$7,262M, and basic EPS NT$1.71.

• 9M revenue was NT$297,159M versus NT$257,064M; net income attributable to owners was NT$10,467M versus NT$19,816M, with a prior-year SPIL remeasurement gain affecting comparison.

Outlook and guidance

• Q4 ATM revenue in NT dollars was expected near Q3 levels, with slightly higher sequential gross margin; higher test and product mix were expected to support margins.

• Q4 EMS revenue was expected slightly above the H2 2018 average, with operating margin near Q1 2018 levels; EMS margin was described as steady into Q1 2020.

• Q1 2020 ATM was expected to show stronger-than-normal seasonality and materially stronger margins; EMS was expected to follow typical seasonality. Normal Q1 revenue seasonality was a 10%-15% decline.

• The annual US$100M incremental SiP revenue goal remained on track, with new projects and continued momentum expected in 2020.