AEM: Maybank and KGI raise target prices too

Excerpts from Maybank KE report

Analyst: Gene Lih Lai, CFA

9M19 ahead; setting up for FY20E growth; BUY

Reiterate BUY with higher ROE-g/COE-g TP of SGD2.12 (4.1x blended FY19-20E P/B, prev: 3.2x), as we raise FY19-21E EPS by 13-71%, factoring in:

AEM
Share price: $1.63	Target: $2.12

i) AEM’s higher FY19E revenue guidance;

ii) stronger-than-expected HDMT momentum; and

iii) inclusion of contributions from hybrid project and cable testers for Huawei in FY20-21E.

9M19 PATMI already reached 95%/93% of our/consensus’ FY19E estimates.

Despite high-base effects, FY20E dynamics appear favourable for further growth.

Strong FY20E guidance would be a catalyst, while weak demand for key customer’s chips would be a key risk.

Full report here.

Excerpts from KGI report

Analyst: Tan Jiunn Chyuan (Kenny)

AEM
Share price: $1.63	Target: $1.80

• AEM’s 3Q19 results exceeded expectations. 9M19 results now form 79% of our initial 2019 sales forecast, and 96% of our initial 2019 PATMI forecast. AEM has also increased revenue guidance to S$305-315mn for FY2019

• We researched key customer wallet share amongst test equipment peers to better understand AEM’s revenue sustainability with the key customer

• We amend our revenue forecast to include the potential sales of AEM’s next generation of test handlers. Our new PATMI forecast is S$44.6/41.2/45.3 mn for 2019/2020/2021F

• Maintain OUTPERFORM. We increase our 12M Target Price to S$1.80, from S$1.34. We look forward to 6 November for management’s presentation for potential insights

Full report here.