SINGAPORE (March 9): CIMB has started its coverage of AEM Holdings with an “add” rating at a higher target price of $2.69.
This follows the completion of the company’s restructuring exercise and the development of a “game-changing” test handler product.
AEM has undergone shareholding and management changes in the past few years and in a Wednesday report, CIMB analyst William Tng believes the engineering firm is now positioned for growth.
“FY14 marked the last year of restructuring, with the company selling off its loss-making semiconductor substrate business. As at FY16, net cash was $6.2 million. Since FY15, AEM has also been regularly buying back its own shares,” says Tng.
The positive outlook can be attributed to a cutting-edge test handler product that is able to test various types of computer chips on a single machine.
All associated costs in developing this new generation of high-density modular testers have also been expensed off, notes Tng.
See also: Test debug host entity
On March 2, AEM also announced that it has received purchase orders worth $130 million for delivery in FY17.
However, Tng says investors should be aware of the risks, given that this major customer accounted for more than 80% of FY16 sales.
Year to date, the stock has risen 353% to trade at $1.65 as of 11.05am on Thursday.
