Excerpts from Maybank Kim Eng report
Analyst: Gene Lih Lai
Still in the early innings 2H21 PATMI beat on stronger than expected ramp 2H21 PATMI of SGD29.5m (+47.5% YoY) was ahead of our and consensus estimates, driven by the stronger-than-expected ramp of new generation equipment for Intel.
Maintain BUY with slightly higher TP of SGD6.34. (16x FY22E P/E). |
Still see opportunity for positive guidance revisions
2H21 revenue grew 52.2% YoY to SGD245.3m, driven by the volume ramp of HDBI (high density burn-in) and HST (HDMx system test) test handlers for Intel.
FY21 revenue was SGD565.5m (+9% YoY), surpassing guidance of SGD525-550m.
Management has expressed confidence in
i) achieving FY22E revenue guidance of SGD670-720m, based on current demand and supply side dynamics; and
ii) maintaining the c.17% net margin levels achieved in 4Q21 – which should assuage investor concerns on margin erosion.
Our current forecasts reflect the upper end of management’s guidance, and imply a 17% net margin.
As the year is still early, we still see opportunity for positive revenue guidance revisions, as this has been common historically.
Cyclical and structural drivers![]() We expect FY22E to be driven by i) continued ramp of HDBI and HST, as well as initial ramp from AMPS (asynchronous, modular, parallel, smart). FY23-24E drivers include i) Intel’s capacity expansion (e.g. new Penang assembly and test plant expected to commence production in 2024); as well as ii) continued ramp for new AMPS customer(s). The rise in front-end capex should pave way for back-end capex, and we believe AEM should benefit from this with most of its customers. |
Risks
In our view, key risks include unexpected worsening of supply-side problems due to Covid-19. Currently, we do not expect the Russian-Ukraine conflict to alter AEM’s customers’ capex plans.
Longer-term, a risk to our view is if chip oversupply tempers customers’ capacity addition plans.
Full report here.