DBS Group Research has initiated coverage of AEM Holdings, and has the highest target price among sell-side brokers. 



2019 Forecast Revenue

2019 Forecast Net Profit

Target stock price


Lee Keng LING

$308 m

$46.7 m


Maybank KE

Gene Lih Lai, CFA

$307 m

$43 m



William Tng, CFA

$314 m

$44.8 m



Kenny Tan

$312 m

$44.6 m


NextInsight compilation.

Excerpts from DBS Group Research report
Lee Keng LING

"Testing” new highs
LokeWaiSan519aExecutive Chairman Loke Wai San. NextInsight file photo• Initiating coverage with a BUY and TP of S$2.38, representing a potential upside of 39%

• Key customer is increasing capex and production capacity

• New technology structurally increases test times, leading to higher demand for test handlers

• Diversification of revenue stream through new projects and customers

Leveraging on increasing capex for key customer. Intel has guided for a record-high capex of US$16bn in FY19 on the back of developments in new technology.

The company intends to continue to increase its 14-nm and 10-nm production capacities by 25% each in 2020 to meet customers’ demand. This should drive demand for test handlers, where AEM is believed to be the sole supplier.

New technology to drive longer test times, leading to higher demand for test handlers. As technology nodes shrink, longer test times are required to perform more complex tests. In addition, systems and devices used in safety-critical markets such as automotive (driverless vehicles), industrial, and medical equipment, will require more stringent system level tests. These would lead to higher demand for test handlers.

“…due to AEM’s customised solutions that stems from its 17-year working relationship with Intel, AEM is able to substantially reduce the cost of testing for its major customer. As such, Intel relies heavily on AEM for its test handlers. In addition, given our positive outlook on the areas Intel is focusing on and that Intel is a world-class semiconductor company, we believe AEM will continue to grow with its major customer and this is more of a boon than a bane.”

-- DBS report

Diversification of revenue through new projects and customers. AEM is working with its key customer to develop hybrid extensions for the customer’s existing handlers as well as new technology used in quantum computing testing. Other initiatives include supplying cable testing solutions for Huawei’s 5G rollout.

Initiate with a BUY and TP of S$2.38, offering a potential upside of 39%.
Our TP is pegged to 12.1x FY20F PE, and is well below its industry peers’ FY20F PE of 17.8x.

The share price trades closely to the semiconductor cycle and we believe that there will be a further re-rating of its valuation multiple as the cycle begins to pick up, driven by demand for new technology.

Key Risks to Our View: Single-customer concentration risk, escalation or continued protraction of geopolitical events, and FX risk.

Full report here.

Share Prices

Counter NameLastChange
AEM Holdings2.130-0.110
Avi-Tech Electronics0.400-0.015
Best World Int.1.360-
China Sunsine0.430-0.005
CNMC GoldMine0.205-0.015
CSE Global0.520-0.025
Eagle HTrust USD0.405-0.020
Food Empire0.665-0.050
Golden Energy0.155-0.013
GSS Energy0.084-0.003
ISDN Holdings0.1990.004
JB Foods0.590-0.035
KSH Holdings0.375-0.015
Moya Asia0.073-0.004
Nordic Group0.270-0.005
Oxley Holdings0.310-0.010
REX International0.194-0.005
Sing Holdings0.395-0.010
Straco Corp.0.545-0.015
Sunningdale Tech1.210-0.060
Sunpower Group0.525-0.020
The Trendlines0.105-0.008
Tiong Seng0.200-
Uni-Asia Group0.655-0.020
Yangzijiang Shipbldg0.945-0.030

NextInsight RSS

rss_2 NextInsight - Latest News

Online Now

We have 966 guests and one member online

  • admin2