National Day Special Offer! On 6 August 2021, AEM share price staged a return of the prodigy. The night before, the management had released a set of dismal 1HFY2021 financial result that saw revenue plunging by 30% and net profit collapsing by 46% on year-on-year basis. To be frank, I could not sleep well that night and was expecting AEM share price to plummet the following day. I was actually boiling inside, not at the poor result because I was expecting the financial result to be disappointing. To be exact, I was angry at the management for the lack of traction in securing of new major customers. But non-executive Chairman Loke Wai San, being Loke Wai San, managed to outfox everyone once again.
When companies announce financial results in the middle of the night, it can only mean that the result is disappointing. Indeed, this has been the case for AEM. Then again, drawing from the experience of the 1QFY2021 result saga, Loke Wai San probably knew that he could not afford to let AEM share price collapses again. Nonetheless, surely nobody could have predicted the bombshell revelation of the entry of Temasek Holdings. Honestly, I must really hand it to Loke Wai San for pulling this off!
AEM management is known to time its sales guidance and positive announcements to perfection. But the shares placement of 26.8 million to Temasek upended the entire market. Investors were bracing for the free fall of AEM share price in the early morning of 6 August. Instead, they were kept in deep suspense by the surprise trading halt. Subsequently, the shock announcement of the $103 million investment from Temasek Holdings sent AEM share price rocketing from $3.95 to a high of $4.20.
In return for the investments, Temasek Holdings will nominate Russell Tham to join AEM’s Board of Directors. With the backing from sovereign wealth fund, the narrative for AEM share price has changed. At the big picture, what will be the outlook for AEM share price in 2021?
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 at cross-roads
From 1HFY2021 financial result, it is quite clear that securing new major customers must be the top priority for AEM. The excessive reliance on Intel for revenue has led to tremendous volatility of AEM share price in recent years. During the business update for Q1FY2021, many investors were caught by surprise at the sharp fall in revenue. Back then, AEM’s US competitors, Cohu and Tetradyne, all reported year-on-year revenue increases.
Looking at the latest financial result, most investors had expected revenue and profit to decline as management had previously guided that turnaround would be in 2HFY2021. Year-on-year basis, revenue decreased 30% to $192 million while profit crashed 45% to $36.5 million. But what is truly alarming in the financial statement is the [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.]National Day Special Offer!
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