Citigroup: Raise ASMPT (00522) target price to HK$125, value unlocked through SMT business divestment.

Citibank released a research report stating that it has raised the target valuation multiple for ASMPT (00522), from a forecasted P/E ratio of 28 times this year to 35 times (peak), with the corresponding target price increasing from the original HK$100 to HK$125, with a "buy" rating. This reflects strong industry valuation reevaluation and the value potential brought by market speculation of the possible divestment or spin-off of its surface-mount technology (SMT) business. The bank observed that more and more capital expenditures are being directed towards the advanced packaging (AP) sector, which will drive profit growth for backend equipment suppliers. The potential divestment of ASMPT's SMT business would allow the company to focus on semiconductor equipment and advanced packaging business. According to Citibank, this will unlock shareholder value. The bank's sum-of-the-parts (SOTP) analysis estimates a higher per-share value for ASMPT than the target price. Citibank believes that as ASMPT transforms into a semiconductor equipment company, its stock price may exceed historical valuation ranges.