AT&S confirmed at HOLD, TP EUR 16.50 - This time, visibility is really, really low
The ongoing economic downturn caused by shutdowns in the wake of the coronavirus pandemic makes for a visibility at such new lows that even industry giant Apple refrained from giving guidance. Also, emerging demand trends point into different directions: Server and cloud data spending soared in 1Q 20 as companies prepared for work-from-home infrastructure, while recent semiconductor spending forecasts paint a bleak picture for consumer, industry and automotive demand, with declines in the low double digits after an already challenging year 2019. Rising unemployment raises question marks on consumer confidence, which might weigh on communication demand as well, despite new 5G devices to be rolled out in autumn. AT&S has exposure to both: The increasing IC substrate capacities should be supported by infrastructure demand, while smartphone, industrial and automotive demand should weigh on the top line and profitability. Ahead of the FY 2019/20 results release we have revisited our forecasts also for 2020/21e according to broad industry estimates but keep the long-term trend intact. We reckon with a tough year ahead and might not see a guidance on earnings right from the start of the year. We calculate a new target price of EUR 16.50 (EUR 21) based on a DCF model and 2021e multiples, which warrants a HOLD recommendation.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.
The Institutional Equity Research team of Raiffeisen Bank International AG covers 85 stocks from Austria, Central & Eastern Europe with sell-side research and thus levers our local broker status with excellent company relationships. For corporates in Austria, CEE and Western Europe, we offer co-sponsored research, which includes research coverage and marketing activities to investors. Additionally, through our Spotlight Research product we also shed light on leading European small and micro-caps, seeking greater visibility with investors.
The Institutional Equity Research team consists of roughly 15 analysts, both in Vienna and the CEE countries. Our analysts provide long-standing sector expertise in tandem with profound local market know how and a sectoral approach across the entire region.
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