Screen 2Q25_3_ Raising near term China outlook

Summary of Screen Holdings Co Ltd 2Q FY25/3 Earnings Call Company Overview - Company: Screen Holdings Co Ltd - Industry: Semiconductors - Rating: Market-Perform - Price Target: ¥9,700.00 - Current Price: ¥10,030 - Market Cap: ¥1,018.95 billion Key Financial Results - 2Q FY25/3 Revenue: ¥143.2 billion, up 23% year-over-year, but below consensus by 2% [1][8] - Gross Margin: 38%, better than consensus [1][8] - Operating Margin: 21.3%, also better than consensus [1][8] - Net Income: ¥20.6 billion, in line with consensus [1][8] - Earnings Per Share (EPS): ¥211.72, up 21.8% year-over-year [14] Segment Performance - SPE Revenue: Missed by 3% due to push-out of low-margin sample products [1][8] - GA Revenue: Slightly above consensus [8] - FT Revenue: In line with consensus [8] - PE Revenue: Below consensus [8] Guidance and Outlook - 2H FY25/3 Revenue Guidance: Raised by 5.5%, 1.3% above consensus [2][11] - Operating Profit Guidance: Missed by 1.7% due to low-margin product push-outs [2] - China Sales Contribution: Expected to contribute 38% of revenue in 2H, up from 34% previously [3][8] - Long-term China Contribution: Expected to remain above 30% in FY26/3, normalizing to 25-30% thereafter [3][8] Market and Competitive Landscape - WFE Growth Outlook: Expected single-digit growth for next year, with DRAM capex growing 15%, NAND +15%, Foundry +5%, and logic -15% [5][8] - Screen's Growth Expectation: Anticipates double-digit growth, outpacing the industry [5][8] - Margin Outlook: Aims to maintain SPE operating profit margin at around 24% despite lower China contribution [4][8] Risks and Considerations - Competition and China Risk: Long-term growth outlook is balanced by competition and risks associated with China [5][8] - Investment Implications: Market-Perform rating maintained with a target price of ¥9,700 [5][23] Additional Insights - Capacity: Current capacity of S3-5 has ramped up to full capacity of ¥500 billion, with further optimization expected [8] - R&D Investment: Management plans to increase R&D investment if margins exceed expectations [4][8] This summary encapsulates the key points from the earnings call, providing a comprehensive overview of Screen Holdings Co Ltd's performance, outlook, and market positioning.