Chinese New Year Special Offer! For the past one week, AEM share price (SGX: AWX) has been in outrageous form. Apparently, the 3rd quarter business update had ignited the rally of AEM share price (SGX: AWX). At the point of writing, this counter is still in red hot form and showing no sign of cooling down. What truly confounded many investors was the fact that net profit for 9MFY2021 had plummeted 33.4% to $53 million. The rise of AEM share price (SGX: AWX) defied all sense of logic as poorer financial result usually leads to lower share price. Against this backdrop, what could be the triggering factor that led to the raging form of AEM share price (SGX: AWX)?
In my view, the sudden burst of form of AEM share price (SGX: AWX) may not be attributed to a potential Nasdaq listing nor the positive outlook for its chip testing business. Although these are important catalysts for AEM share (SGX: AWX), I honestly doubt that they played a part in the recent meteoric rise of 21% in AEM share price (SGX: AWX) in the past one month.
Based on my hypothesis, I think the recent superb form of AEM share price (SGX: AWX) should be due to the recent award of the patent crucial for its next generation System Level Test platform (patent no: 20210325452). The Group filed the application for the patent on 16 September 2020 but was only awarded the patent on 21 October 2021. The patent effectively paved the way for the volume ramp up with its key customer, Intel. The patent award also coincided with the explosive form of AEM share price (SGX: AWX). Talk about being at the right time and right place!
Investors must not underestimate the impact of the new patent. In fact, this is not the first patent for AEM. In March 2018, AEM was awarded its first patent for the design of its High Density Modular Test handler system (HDMT). That patent turbocharged AEM share price (SGX: AWX) from a low of $0.16 in 2017 to a high of $1.87 in 2018. That was an incredible 10-fold surge for AEM share price (SGX: AWX).
The joint patent filed with Intel for HDMT had rescued AEM from the brink of collapse in 2012. For AEM, HDMT is like giving wings to a tiger, providing AEM plenty of cash flow and unique edge over its competitors. The latest patent should be for its next blockbuster test equipment product – Asynchronous Massive Parallel (AMPS). This new capability allows high powered chip to be tested under thermal controlled environment without damaging the chip. At the same, AMPS allow AEM to customize testing needs according to customers’ products. In today’s context, these are important factors because next generation chip dissipates a lot of heat and must be tested for reliability.
Although it is still early days, I am of the view that the new patent would have the same impact on AEM share price (SGX: AWX) as the first one. Hence, this is really the golden window to enter this counter. Otherwise, when the volume ramp up materialized in the next few months, AEM share price (SGX: AWX) will become far too expensive to accumulate. Incidentally, Temasek Holdings had jumped on the bandwagon right before the patent was awarded. Within the span of two months, they are sitting on paper profit of about $30 million!
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 6000 AEM), so my views on AEM share price (SGX: AWX) may be biased.
AEM share price (SGX: AWX) in Game of Throne
With the new patent, AEM will be [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.]Chinese New Year Special Offer!
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