|
Following AEM Holdings' strong 1Q financial performance, analysts across the board have scrambled to aggressively revise their target prices upward. AEM stock traded around S$1.70 at the start of the year and has surged to S$10 this morning. Summary of target price revisions (average target: S$12.77) with CGS' being the highest:
|
| Strong 1Q26 Earnings Beat |
AEM reported a net profit of around S$14.3 million, a surge of 330% y-o-y, reflecting strong economies of scale as its revenue increased 35.8% to S$116.9 million.
Furthermore, management raised its full-year 2026 revenue guidance by roughly 20% to between S$550 million and S$600 million.
Here is what analysts had to say:
John Cheong at UOB Kay Hian: Raised his target price by a whopping 176%, Cheong noted that "1Q26 earnings of S$14m (+329% yoy) were significantly above our estimates, at 44% of our full-year forecasts due to higher-than-expected revenue and net margin from better operating leverage".
| 2028 full ramp-up |
 "Our PE peg multiple has been increased to 40x 2028F PE, upfrom 33x 2027F PE to reflect the strong earnings recovery cycle and ramp-up of the new customer. We believe 2028 earnings will capture the full ramp-up of more new customers and new projects." -- John Cheong, UOB KH |
He attributes this to the successful deployment of AEM’s highly parallel package test solutions, which are essential for power-dense AI devices.
Amanda Tan at DBS Group Research: Attributes the success to a combination of recovering legacy client and explosive new markets.
She says: "Earnings beat was driven by the fabless customer ramp, improving demand from the PC/Foundry customer and margin expansion".
She emphasizes that the "AI-led market expansion drives a structural step-up in test complexity and demand which plays into AEM’s strengths".
William Tng at CGS International: Pointed out that AEM is entering a highly lucrative phase.
| S$100 m profit earlier? |
 "Reiterate Add, with a higher TP of S$14.79 as S$100m net profit could come earlier in FY27F than previously expected FY28F."-- William Tng, CGS |
He asserts that the "1Q26 performance... shows that AEM’s new earnings upcycle is on track".
He believes that the company's financial milestones are accelerating, highlighting that a "S$100m net profit could come earlier in FY27F than previously expected FY28F".
Jarick Seet at Maybank IBG: Points out that the earnings surge was underpinned by "higher-margin Test Cell Solutions revenue following the successful deployment and customer acceptance".
Looking at the broader horizon, he notes that securing new hyperscaler customers could be a game-changer, concluding that "AEM offers a compelling multi-year growth story".
Ultimately, AEM Holdings is positioned at the intersection of recovering PC demand and the explosive, structural growth of Artificial Intelligence infrastructure. Here is a summary of analysts' forecasts of AEM's revenue and profit with CGS' profit expectation being the highest:
With its testing solutions gaining massive traction and a diversifying customer base including global customers, it is no surprise that analysts are entirely convinced that AEM's growth momentum has a long road ahead. "AEM is still in talks with other new customers, and its strategic partnership with ASE Technology Holding (TPE 3711) could open up additional opportunities," says Jarick Seet of Maybank. |
|||||||||||||||||||||||||||||||
