Is AEM’s 21% stock upside potential justified?

The semiconductor solutions provider’s shares soared after it secured a new major client this week.

  • AEM (SGX: AWX) share price rallied as much as 5.5% this week
  • The group announced on Tuesday (31 August) that it has won a new contract with one of the industry’s leading memory device manufacturers
  • Following that, CIMB analyst lifted his target price on the stock to S$4.76 from S$4.61
  • Keen to trade AEM shares? Open an account with us to get started.

AEM stock price analysis: what’s the latest?

AEM announced on Tuesday that it was selected to be the System Level Test (SLT) Solution supplier for one of the industry's leading memory integrated device manufacturers.

As part of the contract, AEM will provide this customer with its AMPS SLT+ solution, a full-stack product that includes high-speed device handling, seamless integration of test content, advanced thermal control, intelligent data tracking, and factory 4.0 automation readiness.

Following that, CIMB analyst William Tng raised his firm’s target price on the stock to S$4.76 from S$4.61 previously, while maintaining a ‘buy’ rating.

‘While no financial impact guidance was provided, the announcement demonstrates that AEM has the technical solutions to win new customers,’ Tng wrote in a research note posted on the same day.

This latest contract win also ‘reaffirms confidence that AEM can diversify its customer base’, he added. AEM had previously guided in its 1H 2021 results that it was in deep technical engagements with 10 out of the world’s top 20 semiconductor companies, and was optimistic that they would translate into meaningful revenue by FY2022.

Additionally, Tng also noted that ATECO, a South Korean specialist in the design and development of memory test handler solutions - which is 26.59% owned by AEM, had recently won orders from two of the largest memory manufacturers in the semiconductor industry for its next-generation memory module handler.

‘Given the initial success in customer diversification, we no longer peg a discount in valuing AEM. We now value AEM at 13.9 times (current sector average P/E multiple) FY22F EPS. Previously we used 13.4 times, a 5% discount to the then sector average multiple,’ said Tng.

AEM shares have 21% upside potential

The AEM stock is down by over 11% in the last one month, but up by 15.5% year-to-date.

Earlier this month, the semiconductor solutions provider reported a 30% decline in revenue to S$192.3 million for the first half of 2021. However, this was still its second highest half-yearly revenue on record.

The group stated that it remained ‘confident of a strong uptake’ in 2H 2021 into 2022. It also maintained an earlier revenue guidance of S$460million to S$520 million for FY2021.

The stock currently has a majority rating of ‘outperform’ and average target price of S$4.97, based on the latest SGX StockFacts analyst data.

The target price equates to a potential 21% upside from its last traded price of S$4.11 on Thursday (02 September).

What’s your view on AEM? Take a position on the stock today

Go long or short with CFDs on 16,000+ shares with our award-winning platform.* Perfect your technique with S$200,000 worth of virtual funds in your free demo account. Create a free demo account now.

* Based on the Investment Trends 2018 Singapore CFD & FX Report based on a survey of over 4,500 traders and investors. Awarded the Best Online Trading Platform by Influential Brands in 2020. Awarded the best retail FX provider for Asia by FX Markets in 2020

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.