AEM: Short-sellers have hand in share price dive

SGX data (see table) shows a sharp jump in short-selling of AEM stock yesterday when the share price dived 24.6% to close at 75 cents.

This was on the back of a CIMB cut in the target price from $1.78 to just 69 cents based on 10X its forecast earnings per share.

(This new target price is way below the $1.00 that independent director Loh Kin Wah bought 100,000 shares at less than four weeks ago!)

The day before (31 July), short-selling became significant, contributing to the 16.8% dive of the stock which closed at 99 cents.

This was Day 1 following the release of AEM's 2Q results after the market closed on 30 July. 

What the company said that pointed to uncertainties ahead were:

♦ "We expect to enter a rolling upgrade phase starting 2019, which may introduce significant volatility into our business."

♦ "Our visibility into 2019 remains dim though we continue to work on our consumables business and have teams working on several new product initiatives."

 
Note: The SGX short-sell data may not reflect the entire situation: 

1. Investors are required to mark a sell order in a security as a long sell or short sell. It's possible that some short-sells are not marked by the traders.

2. Data on short sale volume/value may not reflect the outstanding short position in those securities. Volume/value of short sales may include trades which have since been squared off by offsetting buy trades.

 
Loke Wai San, executive chairman of AEM. NextInsight file photo.A note on the fundamentals of AEM: It has to-date received sales orders worth S$235 million for delivery in FY2018.

Its profit guidance for FY2018 remains unchanged from the guidance provided on 22 January and 5 April 2018 -- ie, AEM expects at least S$255 million in revenue and S$42 million in operating profit before tax.

AEM, at its AGM in April 2018, guided how its business will take shape going forward, as follows: