SINGAPORE (Apr 6): CIMB is maintaining its “add” call on AEM Holdings with a target price of $8.19.
This came on the back of the group announcing on Thursday it has received sales orders with $192 million for delivery in FY18 as at Apr 1, a $77 million increase from when it last announced in Feb 1.
As such, the group decided to keep its profit guidance for FY18 unchanged from when it last provided on Jan 22 of at least $255 million in sales and $42 million in operating profit before tax.
In an SGX filing on Thursday, executive chairman Loke Wai San says, “As our test handler platform reaches wider implementation at our customer’s sites, we expect seasonality in our sales with peak quarters in Q2 and Q3. We currently have limited visibility for 4Q18 as a result of shorter order lead times provided by our customers.”
In addition, the recent distribution in specie of Orion Phoenix, has caused the previous largest shareholder of AEM, James Toh, to now be the single largest shareholder with a 7.75% stake.
On the same day, the group also announced that Toh has been appointed as a non-executive non-independent director, whom is publicly committed to stay a long-term shareholder of the company.
See also: Test debug host entity
In a Thursday report, analyst William Tng mentioned that the research house organised a conference call to address concerns regarding the group’s share price declines over the past few days.
Investors were present during the conference call and were able to get greater clarity on the group’s earnings guidance, which does not depend on its major customer’s business with Apple’s PC product line, as well as AEM’s own guesstimate that its Test Handlers (TH) are not widely used in its major customer’s PC related business yet.
Furthermore, the group also provided clarification on its ability to offer a dumbed-down version of its TH to other customers and internally - the group is the early stages of exploring this possibility and the group’s belief that there is a chance its major customer could start to replace some of its legacy TH in FY18.
As at 11.40am, shares in AEM are trading 16 cents or 2.74% higher at $6.02, giving it an FY18 price-to-book ratio of 3.89, with a dividend yield of 3.14%.
