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AEM Holdings - Maybank Research 2022-11-07: 3Q22 Beat

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

  • AEM secured three new customers over the last few quarters and we believe that the key to AEM’s earnings surprise will be highly dependent on the volume ramp up progress of these customers. We think that the positive surprise, if any, will come in 2H23E as the volume ramp up will likely occur then.

Better to wait and see






Jarick Seet Maybank Research | https://www.maybank-ke.com.sg/ 2022-11-07
SGX Stock Analyst Report HOLD MAINTAIN HOLD 3.43 UP 2.980



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