Citi has issued a research report maintaining its "Buy" rating on ASMPT (HKEX: 00522) with a target price of HK$190. The company announced its decision to retain its SMT business, primarily because AI-driven demand has significantly improved the division's financial condition.

Citi expects the stock price may face short-term pressure, as some investors had anticipated a re-rating toward a pure-play semiconductor equipment valuation following a spin-off of the SMT business. However, better-than-expected SMT forecasts are likely to improve the company's overall earnings outlook.

Management projects that the global SMT total addressable market will grow at a compound annual growth rate exceeding 20% from 2024 to 2027. The company's SMT order market share has risen from 24% in 2025 to the current 31%, with the related order value increasing from US$700 million to US$1.4 billion. AI applications and AP currently account for 50% and 25% of SMT orders, respectively.

Management estimates that SMT business revenue could reach approximately US$1.6 billion by 2027, with a gross margin of 40% and a segment margin of 20%. Citi calculates this implies net profit for the SMT business of about US$230 million (HK$1.8 billion). Based on the updated SMT earnings, the transaction valuation previously reported by Reuters implies a 2027 price-to-earnings ratio of only 4 to 5 times, which Citi considers undervalues the SMT business.

The bank noted that management is confident about the improved business outlook, mainly because support from the order backlog may continue beyond the cyclical recovery phase.