Excerpts from CGS-CIMB report

Analyst: William Tng, CFA

AEM Holdings Ltd
Adding capacity for growth

AEM announced its expansion plans today (16 Jun 2022) that will more than double its current manufacturing space in Malaysia, US and Singapore.


Share price: 


We also note the successful conclusion of new product developments such as a CMOS testing solution with UTAC and AEMs own Trident platform.

We reiterate our Add call with a TP of S$6.85.

Top AEM11.21
Expansion plans announced

AEM announced its expansion plans via SGX’s company announcement platform today (16 June 2022) at 12.27pm.

AEM will have a new site in Penang and the US. Together with expansion in the Singapore site, AEM expects to more than double its current manufacturing space in these three countries and create more than 300 additional jobs.

AEM will also expand its Research and Development (R&D) centres in these three countries.

The expansion is slated to come online by the end of 3Q22F.

The Penang expansion includes an R&D lab and AEM will also seek to double its headcount in Malaysia to support this expansion.

The US expansion plan will include R&D, prototyping and manufacturing in Arizona and California.

Meanwhile, the expansion efforts in Singapore will focus on R&D.

New product offerings

On 13 Jun 2022, UTAC Holdings Ltd (UTAC, Unlisted), a semiconductor test and assembly services provider announced a new cost-effective, next-generation test
system solution for Complementary Metal-Oxide Semiconductor (CMOS) image sensors. This test solution was jointly developed together with AEM.

According to AEM, the company delivered its fully integrated CMOS Image Sensor Test Cell to UTAC in 2021. This complete solution includes a tester, illuminator, and handler.

According to its 2021 Annual Report, AEM has also developed its own new high-power System Level Test (SLT) platform, “Trident”. Trident leverages on AEM’s strength in advanced thermal control and will be positioned to capitalise on solving daunting test challenges stemming from the new and rapidly growing heterogeneous package industry.

Reiterate Add
williamtng4.14William Tng, CFA We reiterate our Add call with a TP of S$6.85 based on a 15.62x (10% premium to AEM’s 2 s.d. above its FY17-21 historical average forward P/E multiple of 14.2x) at an FY23F EPS forecast of S$0.4384.

Potential re-rating catalysts are stronger-than-expected orders from its major customer and earlier-than-expected success in securing orders from other potential customers.

Downside risks are delivery delays, aggressive competitive response and loss of sole supplier status or the emergence of a new supplier.

Full report here.

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