ASML - Litho Mastery - KBC Securities Presentation
Following the Investor Day, we have made moderate upgrades to our estimates for the next 1-3 years (EPS up 5-10%) but significantly raised our estimates from 2024 onwards (EPS +20%). Our upgrades are primarily driven by a much-improved DUV outlook, higher EUV-related ASPs, greater appetite for service and field upgrades (i.e. Installed Base Management sales), and greater economies of scale. Our new TP of € 770 values ASML at 40x EV/EBIT 22E, which represents a 40% premium compared to its 3-year historical average. We believe that this premium is justified, reflecting its ever-more-important position in the semi space as a lithography system supplier for leading edge technology, its long-term visibility (better than any other equipment maker) and its steeper growth trajectory. Despite its impressive CMD update, the shares have dropped nearly 20% in the last two weeks, which we think is unwarranted. Along with our TP raise, we upgrade the stock to BUY.ASML Holding provides lithography systems for the semiconductor industry, manufacturing machines that are used in the production of integrated circuits or chips. Co. develops, produces, markets, sells and services advanced semiconductor equipment systems exclusively consisting of lithography systems. Co. sells its products to micro-processor manufacturers and Foundries, NAND-Flash memory and DRAM memory chipmakers. Co.'s products line includes the following: PAS 5000 lithography systems, which Co. no longer manufactures but continues to refurbish; PAS 5500 products; TWINSCAN DUV systems and TWINSCAN EUV systems based on a new platform utilizing the concepts of the TWINSCAN platform.
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