What’s next for AEM shares?

• AEM Holdings Ltd (SGX: AWX) share price rallied to a high of S$4.68 this week
• The semiconductor test solutions provider reported its 1H 2022 results
• DBS and CIMB analysts reiterated ‘buy’ and ‘add’ calls
• Keen to trade AEM shares? Open an account with us to start today.

How did AEM fare in the first half of 2022?

AEM Holdings delivered its highest ever half-year revenue and profit before tax.

The group’s revenue for the first half (1H) of 2022 increased by 181% year-on-year (YoY) to S$540.5 million, while profit before tax for 1H 2022 increased by 187% YoY to reach S$102.0 million.

It also reported an earnings per share (EPS) of S$0.268, representing a 152% increase from the S$0.106 posted in 1H2021.

The board proposed an interim dividend of S$0.067 per ordinary share, up from 1H 2021’s S$0.026 per ordinary share. This represents a pay out of about 25%.

During this half, AEM also acquired 53.3% of the outstanding share capital of Nestek Korea Co., Ltd., a South Korean company that specialises in the design and manufacture of pins and sockets.

AEM has revised FY2022 revenue guidance of the group to be in the range between S$750 million to S$800 million.

AEM stock price: what’s the latest forecast?

The semiconductor test solutions provider’s stock has been bullish of late, increasing roughly 14% since mid-July 2022.

On a year-to-date basis, AEM shares are down by 13%.

In terms of stock outlook, AEM shares have an average price target of S$6.14 and rating of ‘outperform’, based on the latest SGX StockFacts consensus data.

The price target represents a 34.6% upside potential from Keppel’s last traded price of S$4.56.

The latest call came from DBS analysts, who reiterated a ‘buy’ call and reduced price target of S$5.88 (from S$6.04) after AEM’s latest results.

The analysts wrote that ‘uncertainty surrounding supply chain disruptions’ are ‘still likely’ to weigh on the company’s margins. They also lowered their earnings forecasts for FY2022 and FY2023 by 2.6% and 0.5% respectively.

CIMB’s research team also maintained an ‘add’ rating alongside a lower price target of S$6.54 (from S$6.85). The analysts raised their FY2022 to FY2024 EPS slightly as they think ‘higher operating costs may be required to support’ their increased revenue forecasts.

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