AEM - Maybank Research 2022-04-27: Game On ~ Intel News Highly Favourable For AEM

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AEM HOLDINGS LTD (SGX:AWX)

AEM - Game On ~ Intel News Highly Favourable For AEM

• We expect Intel to remain a sizeable customer of AEM (SGX:AWX) and developments at Intel should be positive for AEM from:
  1. Intel’s back-end capacity additions, which should underpin earnings in the coming years; and
  2. 18A node being ahead of schedule, which should have positive implications for Intel’s dominance.
• AEM has an extremely positive outlook for this and it’s our top SG tech pick.

Intel says 18A process node ahead of schedule

• Intel recently announced its 18A process, 6 months ahead of schedule. It expects to be manufacturing ready by 2H24. This should help Intel regain manufacturing leadership. Intel said R&D for the node is on or ahead of milestones, imbuing confidence it can begin manufacturing on this node in 2024.
• As we expect Intel to continue to be a sizeable AEM customer, we believe this news has long-term positive implications for Intel’s dominance and market share, and for demand for AEM’s equipment.

Riding on Intel’s spending plans; upbeat outlook

• We see the 2022 ramp believe AEM is a beneficiary as back-end capacity will be needed. As Intel’s new Penang plant should begin operations in early FY24E, AEM could benefit from equipment shipment around 2H23, in our view.

Mitigating risks from supply disruptions

• AEM recently noted that to date, it has not seen material direct impact from the Russia-Ukraine war, but remains mindful of risks of rising for AEM (16x FY22E P/E).
• See
  • AEM's Share Price,
  • AEM's Target Price,
  • AEM's Analyst Reports,
  • AEM's Dividend History,
  • AEM's Announcements,
  • AEM's Latest News.

Gene Lih Lai CFA Maybank Research | https://www.maybank-ke.com.sg/ 2022-04-27

SGX Stock Analyst Report BUY MAINTAIN BUY 6.340 SAME 6.340