Loke Wai San, non-executive chairman of AEM Holdings. Photo by Sim Kih AEM Holdings' 2016 results reflected strong operating results, as expected by many investors.
Pre-tax profit rose 25.1% to S$6.1 million.
On a proforma basis, pre-tax profit jumped 50.5%.
People looking at just the bottomline would have wrongly concluded that profitability was squeezed.
Net profit after tax did decline 19.5% y-o-y to S$4.7 million.
But that is because of impairments, allowances for inventory obsolescence, reversal gains/losses and share of associates’ loss. In addition, in FY2015, there was a net tax credit of S$1.8 million while in FY2016, there was a tax expense of S$1.3 million.
|
S$’000 |
2015 |
2016 |
1H2016 |
1H2017F |
|
Profit before tax |
4,868 |
6,091 |
2,034 |
6,500 * |
|
Adjustment for impairment, allowance, and reversal (gain)/loss |
|
|
|
|
|
Proforma profit before tax |
4,050 |
6,079 |
|
|
|
*forecast by AEM |
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Prospects for AEM's operating results continue to look bright.
Guiding the market, AEM in a press release provided a forecast of its pre-tax profit for 1H2017.
It's "at least S$6.5 million", it said. That's 220% higher y-o-y and it's higher than the pre-tax profit of the entire 2016.
AEM's revenue forecast for 1H2017 is "at least S$70 million". Again, this is higher than the revenue for the entire 2016.
Taking those numbers, Maybank Kim Eng added in a note to clients last Friday: "Annualising the 1H17 profit guidance and applying an effective tax rate of 23.5% would take its 2017 net profit to $9.9m, translating to a 2017e P/E of 5.6x."
AEM continues to expect to do very well in 2017, because of a ramp-up in its delivery of its hot-selling product, mainly to Intel -- the "next generation of high density modular testers that are able to test various types of computer chips on a single machine."
It has just announced that its latest order book stood at $130 million for delivery in 2017.
| ♦ Higher dividends | ||||||||||
After the bonus issue, a dividend of 1.3 cents a share will be paid on 31 May 2017. This is the final dividend for FY2016.  Soh Wai Kong, Finance Director, AEM Holdings. Photo by Sim Kih AEM has also announced a dividend policy -- at least 25% payout of its net profit after tax.Taking the company's guidance of at least S$6.5 million in pre-tax profit for 1H2017, one can estimate a net profit after tax of about S$5 million. On a 25% payout, the dividend is about $1.25 million, or nearly 3 cents a share just on the 1H2017 earnings.  FY2016 results briefing. Photo by El Lee |
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For more details, see the Powerpoint presentation here.
