ASE Technology (ASX) Q4 2019 earnings summary

Executive summary

• Q4 2019 revenue was NT$116,023M, up 2% YoY; parent-attributable net income was NT$6,383M and diluted EPS was NT$1.47.

• FY2019 revenue grew 4% versus pro forma 2018 and 11% versus legal-entity 2018; reported operating income and parent-attributable net income declined versus legal-entity 2018.

Financial highlights

• Q4 gross profit was NT$19.85B, gross margin 17.1%, and operating income NT$8.71B; operating margin was 7.5%.

• Excluding PPA expenses, Q4 gross profit was NT$21.04B, operating profit NT$10.15B, net profit NT$7.84B and basic EPS NT$1.84.

• FY2019 reported operating income was NT$23.526B versus NT$26.648B in legal-entity 2018; parent-attributable net income was NT$16.85B versus NT$25.262B.

• FY2019 PPA-adjusted operating profit was NT$29.34B, net profit NT$22.75B and basic EPS NT$5.35.

Outlook and guidance

• Q1 2020 ATM revenue was projected between Q2 and Q3 2019 levels, with gross margin slightly above Q2; EMS revenue was expected near Q1 2019, with a slightly lower operating margin.

• 2020 outlook anticipated healthy revenue growth, particularly in ATM, sequential growth after Q1 and broad margin improvement as loading increased.

• 2020 CapEx was expected not to exceed 2019 spending; the opex ratio target was 9.4%-9.5% versus 9.9% in 2019.

• SiP growth was expected to remain healthy, and test business was targeted to grow at more than twice the logic semiconductor growth rate.

• Guidance carried higher-than-normal uncertainty from the coronavirus outbreak, with demand, factory constraints and business impacts difficult to assess.