AEM HOLDINGS LTD (SGX:AWX)
AEM Holdings - 3Q22 Beat
- AEM (SGX:AWX) reported a positive 3Q22E, with revenue and NPAT rising 41% and 38.3% y-o-y to S$206.1m and S$32.2m, ahead of consensus and our estimates.
Positive 3Q22 but short-term headwinds ahead
- We raise our FY22E estimates by 5.5% but due to near-term headwinds, we lower our FY23E estimate by 21.5% as AEM enjoyed a buoyant 1H22 due to an exceptional surge in orders by its key customer, which we do not expect to recur in FY23E.
- As a result, we maintain HOLD on AEM with a higher target price of S$3.43 based on a higher 9x, from 7.5x FY23E P/E, and prefer Venture Corp (SGX:V03) in the Singapore tech space for its diversification and resilience.
1H23E won’t be as great as 1H22
- AEM enjoyed a robust 1H22 due to an exceptional surge in orders by its key customer which will likely not be replicated in 1H23E. 1H22 formed about 64% of our NPAT FY22E estimates.
- We expect 1H23E to show a decline y-o-y but this should be partly mitigated by orders from its new customers as shown in the surge in inventory of S$117.6m at end-Sep-22 from end-Dec 2021. We also expect orders to be more evenly distributed throughout the four quarters in FY23E.
Upside surprise depends on new customer ramp up
Better to wait and see
- We believe that it’s better to adopt a wait-and-see approach due to the current macro environment and a looming recession in Europe and the US and the lack of positive catalysts going forward.
- See
- We are confident in AEM’s mid-long term prospects but short-term headwinds may present lower price entry levels in the near-term for investors.
Jarick Seet
Maybank Research
|
https://www.maybank-ke.com.sg/
2022-11-07
SGX Stock
Analyst Report
3.43
UP
2.980