AEM HOLDINGS LTD (SGX:AWX)
AEM - Another Record Quarter
1Q22 beat; target price trimmed on lower margin assumption
- AEM (SGX:AWX)'s 1Q22 PATMI of S$40.8m (+205.6%) beat our and street expectations, at 33-34% of respective FY22E. This was driven by strong momentum in the new generation equipment ramp up.
- We trim FY22E PATMI forecast for AEM by 4% to factor in a lower net margin assumption (15.7% vs 17.0% previously).
- Maintain BUY as we see AEM as a structural beneficiary of system level test (SLT) adoption on rising chip complexity.
New generation equipment drives 1Q22 surge
- AEM's 1Q22 revenue rose 226% y-o-y to S$262m, driven by
- ramp of new generation equipment for Intel; and
- full quarter contribution of CEI (CEI merged in late 1Q21).
- Net profit margin fell 1ppt y-o-y to 15.6%, on a slight drop in PBT margin (19%, -0.8ppt y-o-y) and a higher effective tax rate (18.3%, +1.2ppt y-o-y).
AEM's FY22 revenue guidance raised
- AEM's FY22 revenue guidance was raised to S$700-750m from S$670-720m. Management expressed a high degree of confidence in achieving the updated guidance based on the current operating environment and inventory. Inventory levels are 25% higher than in Dec-21 and stood at S$256m, largely for production in upcoming quarters, although some is for next year.
- AEM is working closely with suppliers to mitigate supply chain challenges.
Risks of short-term profit taking
- While we do not rule out further revenue guidance raises, we expect AEM's 2H22 to be seasonally softer than cycle, as management reaffirms multi-year growth prospects from
- new customers, and
- ongoing capacity expansion from existing customer(s).
- See
Gene Lih Lai CFA
Maybank Research
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https://www.maybank-ke.com.sg/
2022-05-06
SGX Stock
Analyst Report
6.06
DOWN
6.340
