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ASE Technology: The Thesis Strengthened, the Upside Didn't

Writer: Brigette Mwaura
Brigette Mwaura
13 hours ago
8 min read

Summary

  • I am downgrading Ase Technology from a STRONG BUY to a HOLD. It's earnings execution is better than I expected, but negative free cash flow, higher net debt, and a near 30x FWD P/E leave little margin of safety.Q2 revenue rose 26.7% y/y to NT$191.1Bn and diluted EPS increased 171% to NT$4.61, or $0.292 per ADS. ATM revenue grew 36.3% and its operating margin reached 15.7%.


  • The structural thesis strengthened. LEAP revenue is tracking above $3.5Bn in 2026, management is aiming to double it in 2027, and mainstream ATM growth expectations also moved higher.


  • My base case produces 2027 revenue of NT$989Bn and EPS of $1.63 per ADS. A 28x exit multiple discounted at 10% gives a present target of $41, about 8% below the September 30 close.

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Close-up of a sleek computer processor chip with gold circuitry and three dark square dies on a black background.
ASE Technology's advanced packaging and testing capabilities are becoming critical enablers of AI, high-performance computing, and next-generation semiconductor architectures.

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