Excerpts from DBS report


Analysts: Wei Le CHUNG and Lee Keng LING


Poised to re-rate higher

What’s New
• Higher PE peg of 15.0x to reflect our belief of a higher re-rating of the stock

AEM 

Share price: 
$4.95

Target: 
$6.04

• Higher revenues in FY22-23F on the back of significant investments from its key customer

• Next generation of handlers to be a key driver of growth in FY22F

• Maintain BUY with a higher TP of S$6.04

 
Top AEM11.21

Investment Thesis:
Poised to re-rate higher on strong industry momentum. AEM’s share price has a strong positive correlation with the US semiconductor equipment billings, which is one of the indicators of the industry’s strength.

Despite 25 consecutive monthly (y-o-y) increases, preliminary estimates for October indicate a 41.3% y-o-y rise.

We believe AEM is in a strategic position to benefit from its key customer and industry uptrend, and could re-rate higher.

Key customer’s capex indicates a strong outlook for AEM. Intel, AEM’s key customer, believes that the semiconductor industry could double its market size to US$1tr by 2030.

It is ready to commit significant investments to ensure that it is at the forefront and we believe that this will translate into higher revenues for AEM in FY22-23F.

Near-term key catalyst – ramp-up of next generation of handlers to its key customer. In the semiconductor industry, investments in the back-end typically lag the front-end by several quarters.

After procuring front-end equipment, AEM’s key customer has begun to ramp up its next generation of test handlers and we believe that this will be one of the key drivers of AEM’s growth in FY22F.

Valuation:
Maintain BUY with a higher TP of S$6.04. We are raising our TP as we lift our FY22F PE peg to 15.0x and increase FY22F earnings by 11%.

Our higher PE peg is at a c.12% discount to peers. Where we differ: We are more optimistic on revenue and earnings growth.


Key Risks to Our View:
Single-customer concentration risk, geopolitical event.

Full report here. 


Share Prices

Counter NameLastChange
AEM Holdings5.1500.110
Avarga0.265-
Avi-Tech Electronics0.365-0.015
China Sunsine0.495-
Food Empire0.7750.005
Fortress Minerals0.3900.005
Geo Energy Res0.270-0.005
Golden Energy0.290-
GSS Energy0.070-0.001
InnoTek0.760-0.015
ISDN Holdings0.690-0.005
ISOTeam0.133-
IX Biopharma0.230-
Jiutian Chemical0.071-
KSH Holdings0.350-
Leader Env0.073-
Medtecs Intl0.450-0.050
Moya Asia0.064-
Nordic Group0.375-0.015
Oxley Holdings0.190-
REX International0.270-
Riverstone0.715-0.050
Sinostar PEC0.300-
Southern Alliance Mining0.7400.005
Sri Trang Agro1.210-0.100
Straco Corp.0.465-0.005
Sunpower Group0.4900.005
The Trendlines0.106-
Totm Technologies0.2050.005
UG Healthcare0.400-0.025
Uni-Asia Group1.310-0.010
Wilmar Intl4.130-0.060
Yangzijiang Shipbldg1.280-0.020

NextInsight RSS

rss_2 NextInsight - Latest News

Online Now

We have 1853 guests and one member online

  • Lionel Lim