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AEM - Maybank Research 2022-02-27: Still In The Early Innings

AEM HOLDINGS LTD (SGX:AWX) | SGinvestors.io AEM HOLDINGS LTD (SGX:AWX)

AEM - Still In The Early Innings


2H21 PATMI beat on stronger than expected ramp

  • AEM (SGX:AWX)'s 2H21 PATMI of S$29.5m (+47.5% y-o-y) was ahead of our and consensus estimates, driven by the stronger-than-expected ramp of new generation equipment for Intel. Our FY22-23E PATMI estimates are largely unchanged after tweaking forecasts.
  • AEM continues to be a conviction pick in our SG tech coverage due to favourable cyclical and structural drivers.



Still see opportunity for positive guidance revisions

  • AEM's 2H21 revenue grew 52.2% y-o-y to S$245.3m, driven by the volume ramp of HDBI (high density burn-in) and HST (HDMx system test) test handlers for Intel. FY21 revenue was S$565.5m (+9% y-o-y), surpassing guidance of S$525-550m.
  • Management has expressed confidence in
    1. achieving FY22E revenue guidance of S$670-720m, based on current demand and supply side dynamics; and
    2. maintaining the ~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

  • 2H21 results and industry fundamentals support our view that AEM is early in the current earnings cycle. We expect FY22E to be driven by continued ramp (16x FY22E P/E).


Risks






Gene Lih Lai CFA Maybank Research | https://www.maybank-ke.com.sg/ 2022-02-27
SGX Stock Analyst Report BUY MAINTAIN BUY 6.34 UP 6.230



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