AT&S 3Q19/20 - Weak results and a profit warning
AT&S cut its FY 2019/20e revenue guidance from flat revenues yoy at about EUR 1,028 mn to EUR 960 mn and lowered the EBITDA margin guidance to 18-20% from 20-25% previously as the coronavirous outbreak impacts the production in China. While Chongqing I resumed production after the Chinese New Year Holiday, the Shanghai plant and Chongqing II are only to start production in the second week of February (i.e. a loss of one week of output). However, management also considers that the deterioration of the current general conditions, the provision of production materials and personnel, supply chain processes and demand would influence AT&Ss situation. The new guidance implies 2019/20e EBITDA of about EUR 173-192 mn, which compares to a consensus of EUR 221 mn and RCBe of EUR 225 mn. We believe that the coronavirus-related shutdown is only partly to blame for the profit warning as 3Q 2019/20 results had already been very weak on the back of an unfavourable product mix (higher share of IC substrates), weak demand and underutilisation. We expect a negative market reaction overall.AT&S Austria Technologie und Systemtechnik is engaged in the production of printed circuit boards. Co. has three core printed circuit board businesses: Mobile Devices, Automotive and Industrial. Co.'s product assortment ranges from single and double-sided printed circuit boards to multilayer, flexible and rigid, insulated metallic substrate, nucleus, to laser drilled circuit boards. Co.'s products are used as electromechanical linking elements, mainly in the telecommunication sector, automobile industry and medical technology applications, defense and aerospace.
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