Insight Provider, CrossASEAN Research

Nicolas Van Broekhoven

Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

<ul>
<li>AEM reported strong 1Q22 results (+226% YoY) and raised its FY22 revenue guidance to 700-750M SGD. AEM management continues to believe they are in a multi-year ramp-up. </li>
<li>While the US tech sector is imploding left and right AEM is a very specific story linked to Intel's CAPEX binge. Expect momentum to remain in FY22 and into FY23.</li>
<li>Fair Value of 8 SGD remains unchanged (based on 20x 0.40 FY22 EPS), or 62% upside from the current 4.92 SGD share price.</li>
</ul>


AEM reported strong 1Q22 results (+226% YoY) and raised its FY22 revenue guidance to 700-750M SGD. AEM management continues to believe they are in a multi-year ramp-up. 
While the US tech sector is imploding left and right AEM is a very specific story linked to Intel's CAPEX binge. Expect momentum to remain in FY22 and into FY23.
Fair Value of 8 SGD remains unchanged (based on 20x 0.40 FY22 EPS), or 62% upside from the current 4.92 SGD share price.


AEM: Increased FY22 Revenue Guidance; Riding on Intel's Capex Binge into Multi-Year Ramp

<ul>
<li>AEM raises guidance significantly for FY21 and the outlook is bullish on FY22</li>
<li>New customer wins to start showing up in financials by 2H22</li>
<li>8 SGD Fair Value (20x 0.40 FY22 EPS or 84% upside)</li>
</ul>


AEM raises guidance significantly for FY21 and the outlook is bullish on FY22
New customer wins to start showing up in financials by 2H22
8 SGD Fair Value (20x 0.40 FY22 EPS or 84% upside)


Aem Holdings: Raises Guidance for FY21, New Customer Wins in FY22 to Drive Re-Rating to 8 SGD

<a href="https://www.smartkarma.com/entities/aem-holdings-ltd" target="_blank" data-smartkarma-citation="entities:11019:1" rel="noopener">AEM (AEM SP)</a> reported results which disappointed the market. See my latest insight for more details <a href="https://www.smartkarma.com/insights/aem-temporary-weakness-creates-buying-opportunity-going-into-new-product-cycle-as-of-3q21" target="_blank" data-smartkarma-citation="insights:51051" rel="noopener">AEM: Temporary Weakness Creates Buying Opportunity Going into New Product Cycle as of 3Q21. </a>As a result the stock is now lower by 1% YTD.Over the past week the company has been buying back shares almost every day. Does this signal a bottom?  We looked at similar episodes in 2019 and 2020 and conclude that when the company is aggressively buying it is a pre-cursor of strong share price performance going forward. Unlike some US companies which are perennially buying back their own stock <a href="https://www.smartkarma.com/entities/aem-holdings-ltd" target="_blank" data-smartkarma-citation="entities:11019:1" rel="noopener">AEM (AEM SP)</a> is very specific in their timing and it usually reflects management sentiment that AEM is undervalued.Bottom line: while 2Q21 results might not be glorious we expect strong performance in 2H21 and into 2022. Management was very clear on the call "big" new customer wins by 2022 are very likely. If AEM can prove other big customer wins outside <a href="https://www.smartkarma.com/entities/intel-corp" target="_blank" data-smartkarma-citation="entities:16764:1" rel="noopener">Intel Corp (INTC US)</a> this would be a game-changer and increase its M&amp;A appeal going forward. Fair Value remains unchanged at 5 SGD (43% upside from 3.5 SGD).

AEM (AEM SP) reported results which disappointed the market. See my latest insight for more details AEM: Temporary Weakness Creates Buying Opportunity Going into New Product Cycle as of 3Q21. As a result the stock is now lower by 1% YTD.Over the past week the company has been buying back shares almost every day. Does this signal a bottom?  We looked at similar episodes in 2019 and 2020 and conclude that when the company is aggressively buying it is a pre-cursor of strong share price performance going forward. Unlike some US companies which are perennially buying back their own stock AEM (AEM SP) is very specific in their timing and it usually reflects management sentiment that AEM is undervalued.Bottom line: while 2Q21 results might not be glorious we expect strong performance in 2H21 and into 2022. Management was very clear on the call "big" new customer wins by 2022 are very likely. If AEM can prove other big customer wins outside Intel Corp (INTC US) this would be a game-changer and increase its M&amp;A appeal going forward. Fair Value remains unchanged at 5 SGD (43% upside from 3.5 SGD).

AEM Holding: Aggressively Buying Their Own Stock; Historically Pre-Cursor to Strong Performance

<ul>
<li>
<a href="https://www.smartkarma.com/entities/aem-holdings-ltd" target="_blank" data-smartkarma-citation="entities:11019:1" rel="noopener">AEM (AEM SP)</a> will report 3Q23 results on 10/11/23. This will be the first loss-making quarter since 4Q14.</li>
<li>We expect a loss as AEM will have to recognize the 26.7M SGD arbitration expense to settle with <a href="https://www.smartkarma.com/entities/advantest-corp" target="_blank" data-smartkarma-citation="entities:18107:1" rel="noopener">Advantest Corp (6857 JP)</a>. </li>
<li>Investors will be looking for an early read on the FY24 outlook to determine if AEM's stock has bottomed.</li>
</ul>



AEM (AEM SP) will report 3Q23 results on 10/11/23. This will be the first loss-making quarter since 4Q14.
We expect a loss as AEM will have to recognize the 26.7M SGD arbitration expense to settle with Advantest Corp (6857 JP). 
Investors will be looking for an early read on the FY24 outlook to determine if AEM's stock has bottomed.


Preview AEM Holdings: Loss-Making Quarter Ahead For First Time in 10 Years

Thematic (Sector/Industry)

<ul>
<li>2021's vintage of my 5 High Convictions Ideas did extremely well</li>
<li>
<a href="https://www.smartkarma.com/entities/pc-partner-group-ltd" target="_blank" data-smartkarma-citation="entities:8492:1" rel="noopener">PC Partner (1263 HK)</a> was up 543%, <a href="https://www.smartkarma.com/entities/rex-international-holding" target="_blank" data-smartkarma-citation="entities:17074:1" rel="noopener">Rex International Holding (REXI SP)</a> was up 80%, <a href="https://www.smartkarma.com/entities/straits-trading-co-ltd" target="_blank" data-smartkarma-citation="entities:15745:1" rel="noopener">Straits Trading (STRTR SP)</a> was up almost 74% and Shougang Fushan just under 40%.</li>
<li>The underperformer award goes to HK restaurant operator <a href="https://www.smartkarma.com/entities/taste-gourmet-group-ltd" target="_blank" data-smartkarma-citation="entities:27339:1" rel="noopener">Taste Gourmet Group Ltd (8371 HK)</a> as it declined 25%. Below the fold we'll give our 5 High Conviction Ideas for 2022.</li>
</ul>


2021's vintage of my 5 High Convictions Ideas did extremely well

PC Partner (1263 HK) was up 543%, Rex International Holding (REXI SP) was up 80%, Straits Trading (STRTR SP) was up almost 74% and Shougang Fushan just under 40%.
The underperformer award goes to HK restaurant operator Taste Gourmet Group Ltd (8371 HK) as it declined 25%. Below the fold we'll give our 5 High Conviction Ideas for 2022.


Overview of My Winners and Losers in 2021... And 5 High Conviction Ideas Going Into 2022

Singapore

AEM Holdings Limited designs and manufactures semiconductor manufacturing equipment and related tooling parts and precision machining of components for semiconductor industry.  The Company also manufactures and distributes electronics, engineering, chemical and related products. AEM provides engineering services.

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AEM (AEM SP)

AEM: Increased FY22 Revenue Guidance; Riding on Intel's Capex Binge into Multi-Year Ramp

AEM reported record 1Q22 results and in the conference call reiterated it is looking for a multi-year ramp. This ramp is driven by its key client...

Nicolas Van Broekhoven

Aem Holdings: Raises Guidance for FY21, New Customer Wins in FY22 to Drive Re-Rating to 8 SGD

AEM will soon cross the 1B USD market cap treshold attracting a new sort of investor base. Combine this with a bullish outlook for FY22 and all...

Nicolas Van Broekhoven

AEM Holding: Aggressively Buying Their Own Stock; Historically Pre-Cursor to Strong Performance

AEM Holdings has been aggressively buying back stock in the last week. History teaches us this is a pre-cursor to strong share price performance...

Nicolas Van Broekhoven

Preview AEM Holdings: Loss-Making Quarter Ahead For First Time in 10 Years

AEM will report its first loss-making quarter in 10 years. FY24 could bring back EPS to 0.40 SGD meaning the stock could appreciate 75% to reach 6...

Nicolas Van Broekhoven

Overview of My Winners and Losers in 2021... And 5 High Conviction Ideas Going Into 2022

2021's vintage of 5 High Conviction Ideas did extremely well led by star performer Pc Partner. Our new selection for 2022 will hopefully have some...

Nicolas Van Broekhoven

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