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AEM - Maybank Research 2022-05-06: Another Record Quarter

AEM HOLDINGS LTD (SGX:AWX) | SGinvestors.io 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
    1. ramp of new generation equipment for Intel; and
    2. 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






Gene Lih Lai CFA Maybank Research | https://www.maybank-ke.com.sg/ 2022-05-06
SGX Stock Analyst Report BUY MAINTAIN BUY 6.06 DOWN 6.340



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