Lasertec Y16bn order on back of tech improvements

Lasertec develops, manufactures and sells semiconductor and FPD mask and mask blank inspection systems.

The company forecasts a growth acceleration in FY 6/20 as shipments of EUV related equipment begin to take off. Whilst not confirmed we believe there is potential for FY 6/20 sales to include a portion of an outstanding Y16bn order.

Robust semiconductor-related sales combined with conservative R&D budgeting to deliver above plan FY 6/19 earnings as leading-edge investment continued despite a downturn in the wider IC related market. It marked the 6th consecutive year of above plan earnings.

The company forecasts a growth acceleration in FY 6/20 as shipments of EUV related equipment begin to take off. Whilst not confirmed we believe there is potential for FY 6/20 sales to include a portion of an outstanding Y16bn order.

Due to client constraints, Lasertec is unable to disclose the Y16bn customer’s identity or scheduled sales timing, but at its recent results presentation, it finally confirmed the order contents are APMI (Actinic Pattern Mask Inspection) equipment.

Actinic inspection involves the use of a 13.5nm light wavelength, the same wavelength used by EUV, and in this instance allows inspection of EUV mask lithography even through a pellicle. Lasertec is the first company to develop an APMI system and we believe its monopoly leaves it strongly positioned to capitalise as pellicle adoption in EUV processes emerges.

We have revised up our FY 6/20 OP estimate from Y11bn to Y14bn +76.3%YoY and extended our estimates to FY 6/21 when we forecast OP of Y17bn +21.4%YoY. On 22x 6/21 earnings, ahead of a 2 year OP CAGR of +46.3%, we conclude the stock remains undervalued and maintain our Positive rating