AEM soars past S$4 after raising 2020 guidance and dividends

AEM shares smashed past the S$4 mark on Tuesday, after the group raised its FY2020 revenue guidance by another 7%.

AEM share price: What’s the latest?

Semiconductor service provider AEM Holdings' (SGX: AWX) share price rallied past the S$4 mark on Tuesday 04 August 2020, a day after the company reported higher profits for the first half (H1) of fiscal 2020.

As at 10:55 SGT on Tuesday, AEM shares are trading at S$4.15 each on the IG platform – a 13% jump from the previous day’s close.

IG’s market analysis shows that ‘buys’ form 80% of all trades on the AEM counter on the day. Additionally, 91% of client accounts also currently hold ‘buy’ (long) positions on the stock, indicating an expectation for AEM’s share price to rise in the immediate term.

As of 27 July 2020, the stock has a 12-month consensus share price target of S$3.72 per share and an average rating of ‘strong buy’, based on a Refinitiv poll of four analysts.

AEM’s net profit rose 150% in the first half of 2020

The electronics company on Monday 03 August 2020 announced its earnings for the six months ended 30 June 2020.

It reported a net profit of S$55.3 million for H1 2020, 147.9% higher than that of H1 2019.

Net profit margin increased from 14.8% in the first half of 2019 to 20.2% for the same period in 2020 due to higher revenue, operational efficiency, as well as what the company referred to as ‘favourable product mix’.

Revenue increased by 81.7% year-on-year to S$273.7 million for H1 2020, which the group attributed to higher sales in all business segments and new customers.

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Fully diluted earnings per share, after deducting any provision for preference dividends, came in at S$0.2013 for this half, compared to S$0.0818 in H1 2019.

Consequently, the group proposed an interim dividend of S$0.05 per share, up from the amount of S$0.02 paid a year prior. This also represents a pay-out of 25% for the first half of 2020.

AEM raises revenue guidance for the rest of 2020

AEM also raised its group revenue guidance for the full financial year to between S$460 million and S$480 million, citing continued ‘robust demand’ for its semiconductor test solutions even despite the Covid-19 pandemic.

The new guidance represents a 7% increase from its previous lower-end estimate of S$430 million, and an increase of 8% based on the upper-end forecast, as provided in a May 2020 press release.

Meanwhile, capital expenditure is expected to remain at approximately S$4 million.

As a result of the strong demand for development works in 2020, research and development (R&D) expenditure, in particular, is expected to increase in the second half of fiscal 2020 by S$4.2 million to support future projects.

AEM’s Executive Chairman Loke Wai San commented: ‘We managed to minimise the impact from the Covid-19 related disruptions on our operations in the first half of 2020, and all our business segments achieved encouraging progress in growing customer base.’

He added that the group will continue to grow its in-house technology capabilities and expand strategically through mergers and acquisitions, such as that of DDB Design Group in July 2020, in order to solidify its position as a leading solutions provider in the global semiconductor and electronics space.

Read more: Is AEM worth S$3.53 per share?

How to trade AEM with IG

Are you feeling bullish or bearish on AEM Holdings? Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's industry-leading trading platform in a few easy steps:

  1. Create a live or demo IG Trading Account, or log in to your existing account
  2. Enter <AEM Holdings Inc> in the search bar and select the instrument
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

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