AEM share price to hit $6 in 2025?

November 24, 2024 sgwealthbuilder 16 Views 0 Comments

Lifetime Membership Third quarter earning reporting season came and went. As we approach the end of 2024, it’s time to stock-take the performance of AEM Holdings, a homegrown semiconductor test solution provider backed by Temasek Holdings. Year-to-date, AEM share price collapsed by a devastating 60%. The lowest point for AEM share price was in August when the counter crashed to a low of $1.20, scaring the living hell out of investors.

Recent performance of AEM share price suggested that the counter have somewhat stabilized, a reverse from the free-falling trend since the start of the year. Whilst it is too premature to claim that AEM share price has truly bottomed, many investors must be heaving a sigh of relief as the performance of AEM share price for the past two years had been nothing short of horrifying. Question now is whether AEM share price will return to its glory days in 2022 and hit $6 in 2025?

The bloodbath of AEM share price in recent years was largely attributed to a series of strategic missteps made by the management – unhealthy reliance on Intel for revenue, arbitration with business rival (Advantest) and a bizarre inventory shortfall. Arguably, these setbacks have shaken confidence among investors, including myself. To restore confidence for AEM share price, AEM has replaced its CEO, CFO and COO.

With a new management team, investors are anticipating for AEM to turn the page. The current downcycle for the semiconductor has lasted more than 2 years since 2022. Indeed, the wheels came off the wagon in double quick time in early 2022 as the semiconductor industry tanked in the aftermath of a global chip inventory glut During this period, AEM has achieved a record profit of $127 million in FY2022 and then a loss of $1.24 million in FY2023. Based on my projected trajectory and current macro-condition, there may be a possibility that AEM could incur another minor loss for FY2024 before staging a recovery in 2025.

Incidentally, the stabilization of AEM share price came after Prime Minister Lawrence Wong and his Indian counterpart, Modi visited AEM facility to explore synergies between Singapore and India on 5 September 2024. The visit should be seen as significant because you would surely want to showcase your best companies to foreign government leaders from US, China and India to demonstrate that your country has the talents and capabilities for innovation. AEM fits the bill with its various patents and System Level Test 2.0 solutions for AI chips. As such, I am of the opinion that Temasek might be plotting something big or special on AEM in 2025.

Earlier this year, AEM announced in its 1^st quarter business update that “2024 will set the foundation for new test insertion win revenue to grow more than 5x from FY2023 to triple digit millions in FY2025”. With this, investors must be really looking forward to 2025. However, before we get to that, let me provide some insights on the latest financial result.

In this blog, I have always maintained that on its day, AEM share price can be unbeatable. Conversely, when the tide goes against AEM share price, the counter can spiral out of control. On this note, this counter is really not for the faint-hearted. 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 may be biased.

Can AEM share price recover in 2025?

From the market darling of SGX to one of the biggest falling stars of SGX, the fall of AEM share price has been nothing short of spectacular. However, the situation will likely change in the coming months with the recovery of the global semiconductor industry gaining pace. The Semiconductor Industry Association (SIA) has announced that global semiconductor sales were US$166.0 billion for the third quarter of 2024, an increase of 23.2% compared to the third quarter of 2023 and 10.7% more than the second quarter of 2024.

In my opinion, two major factors will determine the fate of AEM share price in 2025, and they are 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.]

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