Scottish fund manager abrdn, a substantial shareholder of AEM Holdings AWX , has bought more shares of the company after having trimmed its stake just a few months earlier.
On Oct 20, abrdn acquired 273,000 shares for $960,516.56, which works out to an average of just over $3.51 each. This brings abrdn’s total stake in AEM to 27.98 million shares, equivalent to 9.058%, up from 8.97%.
The recent buying by abrdn makes a shift in its stance. Back in July 3 and July 31, it had sold 265,800 shares and 754,100 shares at around $3.80 each. Earlier on June 21, the fund manager had acquired 128,200 shares at $3.75.
AEM specialises in providing testing services for the semiconductor industry. Its key client is known to be Intel. Amid the pandemic, AEM enjoyed a surge in the global semiconductor industry as demand for all manners of consumer electronics devices surged. This led to the company reporting record 1HFY2022 ended December 2022 earnings and revenue.
However, the industry cycle started to turn in 2HFY2022 as demand normalised and supply chain constrictions eased. For the most recent 1HFY2023, AEM reported earnings of $19.7 million, down 76.2% y-o-y. Revenue was down 49.1% y-o-y to $275.2 million from a year ago. In addition, AEM lowered its revenue forecast for FY2023 to between $460 million and $490 million from the target of $500 million earlier as customers delay their launch schedules and therefore pushing back demand for AEM’s services.
In his Oct 18 note, CGS-CIMB analyst William Tng upgraded his call on the stock from “reduce” to “add” on expectations of earnings recovery in FY2025 as “demand from its key customer returns”.
See also: UHUY HEHE 123 DBS CEO sells more shares, pockets proceeds of $13.8 million thus far this month
Furthermore, Tng does not see significantly higher capex commitment. “AEM has taken the opportunity arising from the current lull in demand from its customer to improve operating efficiencies and further reduce its cost structure. In our view, AEM should not require any further capex over FY24–FY25 as the new 365,000 sqft plant in Penang is sufficient to meet customers’ needs, says Tng, as he raised his target price to $4.11 from $2.92, based on a higher five-year earnings valuation multiple of 11.3x from 10.2x previously.
Spooked by CEO’s resignation
See also: Chairman and CEO Kuok raises stake in Wilmar International following softer 1Q
Yangzijiang Financial Holding (YFH) has stepped up its share buybacks following the resignation notice of its CEO Vincent Toe, which caused the share price to drop. The company was spun off from Yangzijiang Shipbuilding in its own listing last April.
Toe will leave next April, marking just two years at this job. With his resignation, executive chairman Ren Yuanlin, who controls around 20% of the shares, will assume the CEO role as well.
Toe got to know Ren when he advised the latter in the listing Yangzijiang Shipbuilding here in Singapore in 2007.
On Oct 23, YFH acquired 12.6 million shares at 31.5 cents and 33.5 cents, and on Oct 25, it bought another 2.63 million shares at 30 cents each, bringing the total number bought back to nearly 69.7 million shares under the current mandate that began in May, equivalent to 1.8968% of the share base. In the previous year, the company had bought back more than 276.6 million shares, equivalent to 7% of the share base then.
The bulk of YFH’s business comes from the debt-investing activities done as part of Yangzijiang Shipbuilding. Specifically, it places out short-term loans to the SMEs of China.
With the separate listing of YFH, its business mandate has broadened to fund management and wealth management outside China. From a predominant allocation, YFH aims to lift the proportion of its non-China assets.
On Aug 12, YFH reported earnings of $162.5 million in 1HFY2023 ended June, up 19.2% y-o-y from $136.4 million. As at June 30, its net asset value per share was $1.052, up from $1.0495 as at Dec 31, 2022.
For more stories about where money flows, click here for Capital Section
YFH has been running an active share buyback programme and in the 12 months to June, reduced by 6.2% the number of shares outstanding to 3.65 billion. This has the effect of lifting earnings per share by a bigger magnitude of 27.2% y-o-y to 4.39 cents.
