ASE Technology (ASX) Q4 2018 earnings summary

Executive summary

• FY18 pro forma revenue was NT$397.3B, up 6% YoY; reported revenue was NT$371.1B, up 28%, including SPIL from Apr. 30, 2018.

• Pro forma parent net income was NT$15.9B; excluding PPA expenses and disposal gain, adjusted net income was NT$21.8B, down 7%, with EPS of NT$5.13.

• Reported FY18 net profit was NT$27.4B and parent-attributable net income was NT$25.3B; reported revenue includes SPIL from its acquisition date.

• SiP revenue grew 14% to US$2.2B; ATM and EMS each reached record pro forma revenue, of US$8.2B and US$5.0B, respectively.

Financial highlights

• Q4 pro forma revenue was NT$114.0B, up 8% YoY; operating income was NT$8.6B and parent net income NT$5.4B, down 6% YoY.

• Q4 pro forma net income excluding PPA expenses and disposal gain was NT$6.9B, down 5% YoY; adjusted basic EPS was NT$1.63.

• Reported Q4 revenue was NT$114,028m, up 36% YoY and 6% QoQ; parent-attributable net income was NT$5,446m.

• FY18 pro forma gross profit was NT$64.0B, down 1%, and operating income was NT$26.7B, down 6%; reported operating cash flow was NT$51.1B.

Outlook and guidance

• 2019 outlook called for positive ATM and EMS growth and sequential quarterly growth, though macro and customer demand uncertainty remained elevated.

• Q1 2019 ATM was projected at or slightly below Q1 2018, with gross margin ~1 percentage point lower; EMS was projected slightly above the 2H17 quarterly average.

• Group machinery capex was expected to remain stable YoY; R&D expense as a percentage of revenue was expected to increase slightly.

• New ATM SiP projects targeted US$100M of annual revenue growth from 2019; fan-out targeted US$50M–US$100M of incremental revenue.