Exerpts from CGS-CIMB report


Analyst: William Tng

lokewaisan4.18AEM executive chairman Loke Wai San speaks with investors. NextInsight file photoAEM Holdings’s 1Q18 core net profit at 18% of our full-year forecast was below expectations.

The results came in lower than our expectations due mainly to the higher operating expenses arising from its three recent acquisitions.

AEM

Share price:
$1.49

Target: 
$1.78

Assuming a 17% corporate tax rate, 1Q18 core net profit formed 24% of AEM’s FY18 guidance (pre-tax profit of at least S$42m).

Given that AEM is still the sole supplier to its major customer, the key risks going into the rest of FY18 are order delays or reduced orders from its major customer.

AEM has commented that based on its own observations, its major customer is likely to have satisfied its requirements for new machines and, going forward, less predictable replacement demand (for customer’s legacy machines) will kick in.

williamtng4.14William Tng, analyst, CGS-CMB.On a positive note, there remains room for AEM to raise its FY18 pre-tax profit guidance of at least S$42m as the visibility for the fourth quarter is limited.

We believe AEM will have better visibility on the outlook for 4Q18 when it announces second-quarter results sometime in Aug 2018.

AEM will also launch its own Test Handler product and hopes to announce customer wins in the 2H18/FY19 time frame.


The impact of a trade war on AEM is hard to quantify.

If we apply a 25% and 50% haircut to our earnings forecast for FY19 and maintain our target P/E of 10x, the revised target prices will be S$0.905 and S$1.36, respectively.

Our current scenario is a TP of S$1.78 based on 10x (17% discount to sector average) FY19 earnings.

Full report here. 


Add comment


Share Prices

Counter NameLastChange
AEM Holdings0.8500.015
Alliance Mineral0.260-0.010
Anchor Resources0.023-
AusGroup0.0330.001
Avi-Tech Electronics0.300-
Best World Int.2.6500.170
China Sunsine1.370-
DISA Limited0.003-
Federal Int. (2000)0.260-
Food Empire0.5400.020
Geo Energy0.1660.001
Golden Energy0.230-
GSS Energy0.0950.004
ISDN Holdings0.1970.003
ISOTeam0.2100.005
KSH Holdings0.510-0.005
Lian Beng Group0.480-
Miyoshi0.041-0.001
Nordic Group0.390-
Oxley Holdings0.2950.010
REX International0.0570.002
Riverstone1.1500.030
Roxy-Pacific0.400-
Sing Holdings0.390-
Sino Grandness0.1260.003
Straco Corp.0.7300.050
Sunningdale Tech1.4800.020
Sunpower Group0.3250.015
The Trendlines0.098-0.001
Tiong Seng0.280-
Uni-Asia Group1.160-0.010
XMH Holdings0.180-
Yangzijiang Shipbldg1.2400.050

NextInsight RSS

rss_2 NextInsight - Latest News

Online Now

We have 818 guests and no members online