AEM share price recovering from bloodbath

July 19, 2021 sgwealthbuilder 1193 Views 0 Comments

LIFETIME MEMBERSHIP In the blink of an eye, it had been two months since the capitulation of AEM share. From $4.18 on 29 April to a low of $3.40 on 11 May, AEM share price plunged by a whopping 18.7%. The crash of AEM share price followed the release of Q1FY2021 financial result which saw revenue collapsed 45.4% year-on-year. Since that fateful collapse, AEM share price returned to form lately, hitting $4.18 on 15 July.

The return of AEM share price came at a time when the Group is about to announce the 1HFY2021 financial result. Investors must be holding their breath on the business performance of AEM. More importantly, investors wanted to know the progress of the “deep technical engagements with 10 out of the top 20 semiconductor companies, spanning mobility, memory, and high-performance computing”.

The securing of even one of the top 20 semiconductor companies would be a significant breakthrough for AEM share price. For years, AEM had relied on Intel for revenue source. To expand the customer base, the management had embarked on a slew of acquisitions in recent years. So far, seven technology companies were acquired since 2017 but sad to say, these acquisitions provided minimal impact to the revenue and profit. Evidently, AEM desperately needs a new marquee customer, one that could propel AEM share price to another level.

Interestingly, the 22 June announcement of the US$4 billion expansion of GlobalFoundries in Singapore had ignited the explosive run of AEM share price, which surged from $3.70 to the high of $4.18. It is not clear to me how the expansion of GlobalFoundries would benefit AEM because I doubt the two companies had any business dealings. Even though there is speculation that Intel (AEM’s purported biggest customer) is exploring the acquisition of GlobalFoundries, this is fundamentally a market rumour.

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Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. I am vested in this counter (holding 2000 AEM shares at $4.50), so my views on AEM share price may be biased.

AEM share price not for the weak-hearted

At the moment, it is still premature to claim that it is light at end of tunnel for AEM share price. With a 5-year beta of 1.71, AEM share price is even more volatile than local bank stocks. Nonetheless, with a Price/Earning (P/E) of just 11.74, this counter is not considered expensive nor over-valued. In fact, IFAST share price is trading at P/E of a staggering 99. The recent surge in AEM share price should be attributed to the big boy’s movements.

For the past few weeks, institutional investors had been buying into AEM shares. In the week of 5 July, AEM topped the list of top 10 institutional net buy stocks, with big boys’ net buying $20.6 million of stocks. In 28 June, AEM was the third among the top 10 institutional net buy stocks, with $13.1 million worth of stocks being net bought. In 21 June, AEM made it to the top list, with net buying of $5.9 million worth of stocks. From the data, it can be seen that institutional investors are loading up on AEM stocks prior to the release of 1HFY2021 financial result.

Despite the buy up by the big boys, investors should not [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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