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. 


Share Prices

Counter NameLastChange
AEM Holdings1.000-
Alliance Mineral0.184-
Anchor Resources0.024-0.001
AusGroup0.035-
Avi-Tech Electronics0.290-
Best World Int.2.710-
China Sunsine1.290-
CSE Global0.4650.005
Food Empire0.5400.005
Geo Energy0.187-0.004
Golden Energy0.240-
GSS Energy0.119-0.001
HMI0.560-0.010
ISDN Holdings0.210-
KSH Holdings0.510-
Miyoshi0.047-
Moya Asia0.0830.001
Nordic Group0.350-0.030
Oxley Holdings0.320-
REX International0.088-0.002
Riverstone1.120-0.010
Roxy-Pacific0.410-
Sing Holdings0.395-
SingMedical0.4500.005
Sino Grandness0.060-
Straco Corp.0.750-0.010
Sunningdale Tech1.540-0.010
Sunpower Group0.5150.015
The Trendlines0.100-0.001
Tiong Seng0.265-0.005
Uni-Asia Group1.190-
XMH Holdings0.170-
Yangzijiang Shipbldg1.400-

NextInsight RSS

rss_2 NextInsight - Latest News

Online Now

We have 1805 guests and no members online