AEM share price (SGX: AWX) in fireworks!
Bring on the champagne! Light up the fireworks! AEM share price looks set for a splendid run after the Group delivered an incredibly stellar 1HFY2022 financial result. Revenue for 1H2022 surged by 181% year-on-year to $540.5 million, while net profit rocketed 180% year-on-year to smash $83 million. The first half revenue and net profit were the highest in the Group’s history.
Prior to the result release, many investors (including myself) have the jitters. After all, Intel has posted a brutal US$500 million loss in the second quarter, resulting in the company cutting back on expenditure. Nonetheless, AEM survived the scare to post a stellar financial result. While it is too early to claim that AEM has managed to weed off its reliance on Intel for revenue, the result could push AEM to expedite its effort in diversifying revenue source.
The patent obtained in July for the thermal control for its System Level Test equipment would give AEM the trump card in its negotiation with the top ten semiconductor companies. The contract wins from 2 major customers vindicated my belief that intellectual property is the way to win the battle.
The contract wins came from “a leading High-Performance Computing (“HPC”)/Artificial Intelligence (“AI”) company” and “a leading mobile devices company”. In my assessment, the contract wins should help to offset the potential sales order reduction from Intel. This is because the Group has revised FY2022 revenue guidance upwards to be in the range between $750 million to $800 million. In the last quarter, the revenue forecast was $700 million to $750 million.
Previously, I wrote that AEM may become a $1 billion revenue company. On the basis of the first half performance, that day will come sooner than I expect. In fact, I would have expected AEM share price to breeze past the $5.00 mark on 6th May 2022. If not for the overall stock market carnage, the stellar first quarter performance would have turbocharged AEM share price to high heavens. This time round, AEM management has learnt their lessons well by posting the first half result after the latest Fed rate hike. In this regard, the coming days should see AEM share price going on a rampage.
If the Group could perform like this for the subsequent quarters, then full-year net profit may possibly hit $160 million. If so, then EPS would be $0.516. Assuming we assign a forward PE of 15, then the target AEM share price might be $7.74. To put the icing on the cake, the Board of Directors proposed an interim dividend of 6.7 Singapore cents per share. Against this backdrop, AEM share price should be in bullish form until ex-dividend date.
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.
1HFY2022 performance a turning point?
1HFY2022 could be a pivotal point as [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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