AEM share price (SGX: AWX) in fairytale with Temasek Holdings
Lifetime Membership Will AEM share price become the next fairytale of SGX? Following the release of the 3rd quarter business update, AEM share price (SGX: AWX) has been in rocket form in recent weeks. The bullish form of AEM share price sent the counter to a record high of $5.22 on 30 November. Based on the current run of AEM share price, there is a good chance that the stock could knock iFAST off the perch to become the best performing SGX stock of the year.
Despite the positive business outlook, AEM share price has been rocked by the recent market turmoil caused by the Omicron variant. Amid the market chaos, AEM filed an SGX disclosure that Temasek Holdings purchased 443,700 shares from the market on 25 November. Although the shares were bought before the Omicron variant news, it provided much stabilizing support for AEM share price.
My vision for AEM share price is that it would become a $10 stock in SGX Mainboard. Having a conviction is important in stock investing as it can provide a calming effect when the share price movements are not in your favor. Obviously, the current AEM share price is still some way off my target level but my conviction is not based on blind faith.
First off, the bullish form of AEM share price had fended off short-selling attacks. According to data pulled from Monetary Authority of Singapore (MAS) Short Position Reporting System (SPRS), open short positions against AEM share price fell to a low of 1.77 million as of 19 November 2021. Prior to this, the open short positions amounted to a staggering 8.4 million as of 8 October 2021.
The presence of short-sellers can exacerbate the downtrend of stock movements. As in the case of the recent market sell-offs, we have seen how the bank stocks were brutally short sold. Take for example, short sales of DBS shares amounted to a high of 1.46 million and 1.24 million on 29 and 30 November respectively. The short sales saw DBS share price crashing to a level below $30 mark temporarily.
During the corresponding period, there were only short sales of AEM shares amounting to only 12,300 and 10,400 only. Because of this, AEM share price managed to ride out the recent market rout fairly well. Admittedly, it has not been a jolly ride for AEM share price as the counter fell from $5.06 on 22 November to $4.92 on 23 November due to a surge in short selling volume (136,900). Nevertheless, the overall trending seems to suggest a bullish movement ahead for AEM share price.
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, so my views on AEM share price (SGX: AWX) may be biased.
AEM share price in raging form
Despite the supply chain challenges, the explosive demand for semiconductor chips means that the outlook for AEM should be positive. Coupled with the increasing demand for System Level Testing (SLT), there is a strong possibility that AEM may become a billion-dollar revenue company. After all, the management has raised the full-year revenue guidance to between $525 million and $550 million.
For FY2021, assuming a full-year revenue of $530 million, the EPS should be $0.27 based on net profit margin of 16%. Assuming a PE ratio of 20, the projected AEM share price should be about $5.50 for FY2021. I believe this should also be the minimum AEM share price that Temasek Holdings is looking at because in the recent purchase, Temasek Holdings paid an average of $5.08 per share, which is significantly higher than the $3.85 per share it paid for in August 2021.
Going forward, AEM share price should [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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