Is AEM worth S$3.53 per share?

What’s the AEM share price update?

Shares of AEM Holdings (SGX: AWX) opened 2% on Thursday 23 July 2020, after the company announced a new multi-million-dollar acquisition deal.

Stocks continued to gain throughout the session, hitting an intraday peak of S$3.72 per share at 16:45 SGT – 3.6% higher than the last closing price, based on IG data.

IG’s market analysis show that ‘buys’ form 71% of all trades on the AEM Holdings counter on the day. On a weekly basis, ‘sells’ are still dominating trade volumes at 54%.

In terms of price expectations, 93% of IG client accounts with open positions in this market are anticipating a share price rally, with the remaining 7% maintaining short positions.

AEM acquires DB Design Group for S$4.6 million

The semiconductor chip maker on Wednesday 22 July announced that it had acquired a 100% stake in California-based DB Design Group, Inc for a total consideration of US$3.3 million (S$4.6 million).

DB Design is a supplier of automation fixtures, device kits, and other test-related products, and has delivered turnkey solutions for major semiconductor test and handling systems.

Under the agreement, AEM Holdings will conduct the purchase via two payment modes. The first involves a cash payment of US$2.7 million – to be satisfied in three tranches over the next three years. The second will be through the issuance of US$600,000 worth of AEM shares.

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According to The Edge Singapore, the consideration sum was arrived at on a willing buyer and willing seller basis. The book value and net tangible asset value of DB Design as at May 31, are US$428,000 and US$119,000 respectively.

AEM’s Executive Chairman Loke Wai San commented on the deal: ‘We are thrilled that the team at DB Design is now part of our AEM family. Not only does DB Design have an impressive list of semiconductor customers for their lab handler and custom kits, they also bring tremendous design and application engineering capabilities for AEM’s consumables business, and local support to our North American based customers.

‘We are now able to offer almost 24-hour R&D services to our customers leveraging our US and Asia based teams, as well as rapid prototyping and supply chain resiliency via high mix production run support in the US.’

AEM share price: What’s the forecast?

The AEM stock currently has an 18-month consensus share price target of S$3.69 per share and average rating of ‘strong buy’, based on a Refinitiv poll of four analysts.

DBS analysts recently gave the AEM stock a 12-month share price target of S$3.53, alongside a ‘buy’ call and a dividend yield projection of 2.7% for FY2020.

Annual dividend yield – based on the dividend amount of S$0.031 declared so far for fiscal 2020 – currently works out to be 0.84%.

DBS had referred to the stock – among others – as ‘Covid-resilient’. It stated that such stocks have managed to outperform cyclicals even in the current market pullback, as investors anticipate a more stable or even positive second quarter report card.

The analysts added that while these stocks should remain firm in the near-term, they also do not rule out that any ‘buy-in anticipation’ giving way to ‘sell-on-news’ if financial results for Q2 just meet or fall below consensus expectations.

AEM’s share price is up 79.5% year-to-date.

How to trade the AEM stock with IG

Are you feeling bullish or bearish on AEM Holdings shares? 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 Holding Ltd> 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

Read more: Why the AEM share price is poised for more gains in 2020