LokeWaiSan1 2.2017Loke 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


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

Bonus issue and dividend

If you hold shares pre-bonus issue

1,000

Number of shares post-bonus issue

1,500

Proposed Final Dividend

1.3 cents per share

You will get

$19.50 dividend
(ie 1.3c x 1,500)

In its 2016 financial statement, AEM announced a bonus issue of 1 share for every 2 shares. 

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.

SohWaiKong 2.2017Soh 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. 

resultbriefing2.17FY2016 results briefing. Photo by El Lee


For more details, see the Powerpoint presentation here.


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