AEM: 1H20 sales could reach record high, Covid-19 notwithstanding

Excerpts from CGS-CIMB report

Analyst: William Tng, CFA

BCP activated; FY20F sales guidance intact
● AEM has announced that in response to the Covid-19 outbreak, the company has activated its business continuity plan (BCP) across its operations and supply chain.

● Measures being adopted include travel restrictions, compulsory temperature checking, advisory on personal hygiene, working in shifts at different sites or from home, and ordering materials from alternative sources.

● Despite the recent Covid-19 developments, AEM reiterated its FY20 sales guidance of S$360m-380m provided earlier on 25 Feb 2020.


AEM remains cautiously optimistic on 1H20 sales

● AEM is cautiously confident that its 1H20F sales could reach a record high despite some shifts in the delivery of its sales orders arising from the Covid-19 situation.

● The company also guided that it expects to report a record 1Q20F sales of S$135m145m.

At the top end of its guidance for both 1Q20F/FY20F, 38% of its sales guidance will be achieved in the first quarter, in our view.

Key customer Intel maintaining >90% on-time product delivery
● In a letter posted on its website yesterday, Intel said that it is maintaining above-90% on-time delivery of its products from factories worldwide.

● Intel said that while the Covid-19 outbreak remains a developing situation, its factories around the world continue to operate on a relatively normal basis as the company is working closely with local and national governments to help ensure worker safety while allowing critical operations to continue.

Full report here