AEM: What Maybank expects of 2Q2021 performance & beyond

Excerpts from Maybank report

Analyst: Gene Lih Lai

Entering into the 2Q21 earnings season, we remain Positive on the Singapore tech sector.

On the back of strong WFE spending momentum, we believe UMS and Frencken have room to beat on results.

While we are cautious towards risks of earnings disappointment for AEM and VMS (Venture), we are positive on their prospects over the next 12 months and beyond, based on currently visible drivers.

We continue to see supply-side risks as key ones that could curb earnings performance as we move throughout 2021.

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Company	2Q21E PATMI range	Basis for 2Q21 estimate/ Thesis/ Risks
AEM	SGD14-16m (-22% YoY at midpoint)	Basis: We expect 2Q21 to be sequentially stronger than 1Q21 (PATMI: SGD13.2m). Upside drivers: We believe stronger than expected cloud spending recovery, and/ or materially accretive M&As are upside drivers in 2H21 and beyond. Risks: As AEM has reiterated that new generation of HDMT equipment will undergo production ramp-up in late 3Q21 through 2022, we do not see demand as the key risk as we enter a new earnings cycle. Rather, we see any unforeseen supply side bottlenecks as the key risk. From a stock trading perspective, AEM has gained 20% since it bottomed out in mid-May. We do not rule out profit taking in the near term, especially if the market perceives 2Q21 results to be a non-event, or if 2Q21 results disappoint. We would recommend buying on dips if our thesis remains intact.

Full report here.

Counter Name	Last	Change
AEM Holdings	2.290	-0.070
Best World	2.460	0.020
Boustead Singapore	0.945	-0.015
Broadway Ind	0.125	-0.003
China Aviation Oil (S)	0.905	-0.005
China Sunsine	0.400	-0.010
ComfortDelGro	1.450	-0.010
Delfi Limited	0.895	-0.005
Food Empire	1.280	-0.040
Fortress Minerals	0.305	-0.015
Geo Energy Res	0.300	-0.005
Hong Leong Finance	2.480	-0.010
Hongkong Land (USD)	2.830	-0.020
InnoTek	0.520	-0.015
ISDN Holdings	0.300	0.005
ISOTeam	0.042	-0.001
IX Biopharma	0.040	-0.005
KSH Holdings	0.255	0.005
Leader Env	0.050	-
Ley Choon	0.044	0.001
Marco Polo Marine	0.067	-0.002
Mermaid Maritime	0.136	-0.003
Nordic Group	0.310	-0.005
Oxley Holdings	0.089	-
REX International	0.138	0.003
Riverstone	0.790	-0.005
Southern Alliance Mining	0.445	-
Straco Corp.	0.495	0.010
Sunpower Group	0.205	-0.005
The Trendlines	0.069	-
Totm Technologies	0.022	-
Uni-Asia Group	0.825	-
Wilmar Intl	3.400	0.020
Yangzijiang Shipbldg	1.740	-0.030

Counter Name

Last

Change

AEM Holdings

2.290

-0.070

Best World

2.460

0.020

Boustead Singapore

0.945

-0.015