ASE Technology Holding (3711.TW): Continued Capex spree underpins strong business outlook

We keep Buy on ASE with NT$800 PO on 20x 2H27-1H28 P/E and maintain EPS for '26/27/28E at NT$18/31/45. ASE has filed 152 equipment buys and 101 facility construction announcements through late September, with equipment spending YTD reaching NT$273bn, tracking 82% of its '26 capex guidance of US$10.5bn. The equipment buy should mainly be for 2.5D packaging and chip probing, reflecting accelerated capacity expansion amid strong demand for its LEAP business. Solid sales/margins across the board sponsor heavy capex. Despite rising depreciation from heavy capex and additional funding needs, we forecast ASE's IC ATM sales to +37% CAGR from '26-28 while GMs should improve to 33.8%/37% in '27/28. We believe the decent customer commitment and ROE of 25-30%+ from LEAP business should justify the funding costs.