buysellhold july.23



AEM Holdings Ltd

Gaining traction with new customers


■ On 3 Apr 2024, AEM announced that its ABI test system has been selected as the Plan-of-Record solution by a major fabless chip company.

■ According to the press release, the systems are intended for HVM and AEM will commence delivery from FY24F onwards. No order value was disclosed.

■ This is a positive development for AEM. We reiterate Hold as we await better revenue visibility from late-FY24F into FY25F.



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1Q24F: Expect stable NPL qoq


■ We estimate aggregate net profit for seven Thai banks dipped 1% yoy but increased 17% qoq to THB49.8bn in 1Q24F.

■ We expect stable NPL ratio qoq of 3.61% in 1Q24F but credit cost should remain cautious, rising 8bp yoy to 160bp in 1Q24F.

■ Reiterate sector Overweight. BBL and SCB are our sector top picks



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REITs – Singapore

The Uneven Pace Of Monetary Easing


Interest rates have peaked but the pace of monetary easing is uneven. The ECB is likely to cut interest rates ahead of the FED. Maintain OVERWEIGHT. Our top picks are hospitality and retail plays, which benefit from a continued recovery in visitor arrivals and resilient consumer spending: BUY CLAS (Target: S$1.45), FEHT (Target: S$0.82), FCT (Target: S$2.73) and LREIT (Target: S$0.93). BUY FLT (Target: S$1.52) and KDCREIT (Target: S$2.10) due to a high proportion of Euro-denominated borrowings. 



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Recommendation :  BUY 

Fair Value        :  SGD 0.785



  • Average crude palm oil (CPO) prices rose to MYR4,216 per tonne in Mar 2024 – the highest since Apr 2023 – but may lose steam from Q2 onwards
  • Bumitama Agri stands to benefit when CPO supply is constrained due to its pure upstream exposure and high productivity
  • Increase fair value (FV) estimate to SGD0.785, with Bloomberg consensus forward dividend yield of 6% as at 3 Apr 2024 screening attractive within the Singapore market

Bumitama Agri Ltd. (BAL) is a leading upstream producer of CPO and palm kernel (PK) in Indonesia. It operates a total planted area of 187k hectares (ha) across Central and West Kalimantan, as well as Riau – areas with good precipitation and temperatures well suited for oil palm cultivation – with an average plantation age of 13.1 years as at 31 Dec 2023. BAL’s superior productivity, high quality plantations, and continued focus on maximising its current plantations places it in a good position to deliver on above industry average yields and to capitalise on supportive long-term industry fundamentals, where the dynamics of constrained supply and growing demand should provide some resilience to CPO prices.  


Plantation – Malaysia

Palm Oil Prices Taking The Lead On Supply Tightness


Palm oil prices at most destination markets have surpassed those of the other three major vegoils (SBO, RSO, SFO) for the first time due to short-term supply tightness. Price movements thus far have been within our expected range. Prices of palm byproducts such as palm stearin and palm kernel oil have also strengthened along with higher cocoa prices. CPO prices may weaken, but should remain elevated. Maintain OVERWEIGHT. Top picks: IOI Corporation and Hap Seng Plantations.



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AEM Holdings (AEM SP)

Bright sparks appearing


Upgrade to BUY – worst likely over AEM announced a high volume order win for its automated burn-in solution by a major fabless provider of high-performance compute (HPC) and artificial intelligence (AI) semiconductor chips. We expect this order to contribute at least 5% of its FY24E revenue. In addition, we expect its core customer to increase orders in 2H24E based on our channel checks as other suppliers are getting encouraging forecasts for 2H24E. As a result, we think the worse is over for AEM and raise our FY24E revenue and PATMI by 24% and 50%, respectively. This increases our TP to SGD2.78 from SGD2.13, based on an unchanged blended 15x FY24/25E. We also upgrade our call to BUY from HOLD. 



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