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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
TECHNOLOGY
A2[P]/NR/A+
- ASML report before the open tomorrow; BBG consensus is looking for net sales -13% YoY, orderbook -2%, op income -25% and FCF of EUR 1.9bn (from EUR -153mn in Q223).
- Q1 results were seen as mixed but soft; net sales fell 21.5% YoY to €5.3bn at the mid-point of company guidance. Net bookings saw a big miss at EUR 3.6bn vs. EUR 5bn consensus while FCF was negative at EUR –0.7bn on WC changes and the lower operating result contributing to liquidity falling to EUR 5.4bn from EUR 7bn.
- Q2 guidance also disappointed; net sales guidance of EUR 5.7-6.2bn missed BBG consensus of EUR 6.5bn (consensus currently sees EUR 6bn) while gross margin guidance of 50-51% was in line (consensus currently 50.6%). FY guidance was left unchanged with the group guiding for a stronger H224 and FY25 (FY25 revenue of EUR 30-40bn from EUR 27.5bn in FY23 with a gross margin of 54-56%).
- Equity has performed in line with SX8E since at +8% while spreads have also traded in a tight range against other highly rated peer Tech names despite receiving an upgrade from Fitch in May and a positive outlook from Moody’s in April. Moody’s didn’t tie their positive outlook to reaching any particular metric levels, instead indicating an upgrade could come on continued strong business execution, improvements in EBITDA margins and FCF and continued commitment to conservative financial policy.
- Clearly an issuer of very high credit quality with an unparallelled market position; it’s share of the lithography market as high as 80-90% and while it faces competition in the well-established DUV market, it is the sole supplier of EUV tools. It’s net cash position and ongoing diversification of its business towards services revenues helps to insulate against market slowdowns while new sources of demand such as datacentres, EVs and AI are helping to move expectations towards the higher end of the FY25 sales target.
- The curve is clearly expensive and trades in line with higher-rated tech names despite the current period of softness and despite the sensitivity of the sector to macro/political disruption. Each of the ASML bonds is held in CSPP though traded volumes are reasonable, especially in their 25s, 29s and 30s with the 30s screening the most value on the curve.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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