SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

<ul><li>While Technology has ranked as both the strongest performing sector globally and regionally over the past 21 weeks, the 10 most traded Singapore-listed Technology stocks have averaged a 6% YTD decline in total return on S$63 million of net institutional outflow, with the majority of the 10 stocks priced at a discount to their 5-year P/B.</li><li>Last week, UMS and AEM averaged 8.5% symmetrical returns on combined net institutional flow of S$10 million.</li><li>The 10 stocks have averaged a 6.0% decline in total return over the past 21 weeks on S$62.6 million of net institutional outflow.</li></ul>

While Technology has ranked as both the strongest performing sector globally and regionally over the past 21 weeks, the 10 most traded Singapore-listed Technology stocks have averaged a 6% YTD decline in total return on S$63 million of net institutional outflow, with the majority of the 10 stocks priced at a discount to their 5-year P/B.Last week, UMS and AEM averaged 8.5% symmetrical returns on combined net institutional flow of S$10 million.The 10 stocks have averaged a 6.0% decline in total return over the past 21 weeks on S$62.6 million of net institutional outflow.

Recent AI Spotlight saw UMS & AEM Average 8.5% Gains on the Week

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

<ul>
<li>AEM reported weak 1Q23 showing significant revenue and margin pressure across the board</li>
<li>The company mentioned it was an indirect beneficiary of AI and ChatGPT hype going forward</li>
<li>AEM could achieve 0.40 EPS in FY24 once the semiconductor industry rebounds. Fair Value of 6 SGD is unchanged.</li>
</ul>


AEM reported weak 1Q23 showing significant revenue and margin pressure across the board
The company mentioned it was an indirect beneficiary of AI and ChatGPT hype going forward
AEM could achieve 0.40 EPS in FY24 once the semiconductor industry rebounds. Fair Value of 6 SGD is unchanged.


AEM Holding: Weak 1Q23 Not a Surprise, Hoping for Better FY24

External broker reports(aggregated public sources), UOB Kay Hian

UOB Kay Hian

External broker reports(aggregated public sources)

Backed by the UOB Group, UOB Kay Hian is one of Asia’s largest brokerage firms. Headquartered in Singapore, we are supported by more than 80 branches worldwide including a growing network of offices across Southeast Asia, Greater China, the United Kingdom and North America. Our global footprint and strong international presence have enabled us to feel the pulse of key financial markets and deliver incisive intelligence across industry sectors and asset classes. Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

<ul><li>AEM’s 1Q23 earnings of S$15.6m (-62% y-o-y) was below expectations, meeting only 18% of our full-year estimate, despite the revenue of S$153m (-42% y-o-y) being in line at 26% of our full-year estimate.</li><li>The earnings miss was mainly due to weaker-than-expected net margin.</li><li>AEM (SGX:AWX)’s 1Q23 earnings of S$15.6m (-62% y-o-y) was below expectations, meeting only 18% of our full-year estimate, despite the revenue of S$153m (-42% y-o-y) being in line at 26% of our full-year estimate.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

AEM’s 1Q23 earnings of S$15.6m (-62% y-o-y) was below expectations, meeting only 18% of our full-year estimate, despite the revenue of S$153m (-42% y-o-y) being in line at 26% of our full-year estimate.The earnings miss was mainly due to weaker-than-expected net margin.AEM (SGX:AWX)’s 1Q23 earnings of S$15.6m (-62% y-o-y) was below expectations, meeting only 18% of our full-year estimate, despite the revenue of S$153m (-42% y-o-y) being in line at 26% of our full-year estimate.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

AEM - 1Q23 Earnings Missed; Uncertain Near-Term Outlook

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

Forensic Analyst

Jason Yap, CFA

Forensic Accounting

<a href="https://www.smartkarma.com/entities/nanofilm-technologies-international" target="_blank" data-smartkarma-citation="entities:29700:1" rel="noopener">Nanofilm (NANO SP)</a> is a Singapore-based nanotechnology solutions provider. Its principal business is the manufacturing and distribution of advanced materials and nanoproducts for the consumer electronics, communications, and automotive industries.Founded in 1999 by Executive Chairman Dr Shi Xu, who was then an associate professor at Nanyang Technology University (NTU)'s School of Electrical and Electronic Engineering, Nanofilm raised approximately SGD470.1 million in IPO proceeds in October 2020.During its short history as a public company, the company had to endure significant regulator and investor scrutiny following sub-par H1 2021 results and senior management changes, including the abrupt resignations of former CEO, Mr Lee Liang Huang and former COO, Mr Ricky Tan, in quick succession (June and August 2021 respectively). Dr Shi, assumed the role of interim CEO, until the <a href="https://www.businesstimes.com.sg/companies-markets/nanofilm-appoints-new-ceo-says-it-continues-to-see-growth-momentum-for-business#:~:text=MAINBOARD%2DLISTED%20Nanofilm%20Technologies%20International,on%20Thursday%20(Oct%2014)." target="_blank" rel="noopener">recent appointment</a> of Mr Gary Ho Hock Yong, as Nanofilm's CEO.  Dr Shi served as the company's CEO from 1999 to 2017. On 14 October 2021, Nanofilm provided a business update for Q3 2021, which highlighted continued growth momentum despite a volatile business environment, amid the COVID-19 pandemic and supply chain disruptions. In this Insight, we examine Nanofilm's financial and business risks based on its IPO prospectus disclosures and certain new risks that emerged given latest available facts and developments, including but not limited to the following: <ol>
<li>High Customer Concentration  </li>
<li>Competition from Alternative Products and Solutions</li>
<li>Significant Management Changes </li>
<li>Management Share Disposals </li>
</ol>Accordingly, we highlight the key areas of concern for investors.

Nanofilm (NANO SP) is a Singapore-based nanotechnology solutions provider. Its principal business is the manufacturing and distribution of advanced materials and nanoproducts for the consumer electronics, communications, and automotive industries.Founded in 1999 by Executive Chairman Dr Shi Xu, who was then an associate professor at Nanyang Technology University (NTU)'s School of Electrical and Electronic Engineering, Nanofilm raised approximately SGD470.1 million in IPO proceeds in October 2020.During its short history as a public company, the company had to endure significant regulator and investor scrutiny following sub-par H1 2021 results and senior management changes, including the abrupt resignations of former CEO, Mr Lee Liang Huang and former COO, Mr Ricky Tan, in quick succession (June and August 2021 respectively). Dr Shi, assumed the role of interim CEO, until the recent appointment of Mr Gary Ho Hock Yong, as Nanofilm's CEO.  Dr Shi served as the company's CEO from 1999 to 2017. On 14 October 2021, Nanofilm provided a business update for Q3 2021, which highlighted continued growth momentum despite a volatile business environment, amid the COVID-19 pandemic and supply chain disruptions. In this Insight, we examine Nanofilm's financial and business risks based on its IPO prospectus disclosures and certain new risks that emerged given latest available facts and developments, including but not limited to the following: 
High Customer Concentration  
Competition from Alternative Products and Solutions
Significant Management Changes 
Management Share Disposals 
Accordingly, we highlight the key areas of concern for investors. 

Understanding Nanofilm (Nano SP)'s 3Cs - Customer Concentration, Competition and Management Changes

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.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

AEM (AEM SP)

Recent AI Spotlight saw UMS & AEM Average 8.5% Gains on the Week

While Technology has ranked as both the strongest performing sector globally and regionally over the past 21 weeks, the 10 most traded...

Singapore Exchange Ltd (SGX)

AEM Holding: Weak 1Q23 Not a Surprise, Hoping for Better FY24

AEM reported a weak 1Q23 which was not unexpected given earlier FY23 guidance of 500M revenues. Management remains steadfast in its long-term...

Nicolas Van Broekhoven

AEM - 1Q23 Earnings Missed; Uncertain Near-Term Outlook

AEM’s 1Q23 earnings of S$15.6m (-62% y-o-y) was below expectations, meeting only 18% of our full-year estimate, despite the revenue of S$153m (-42%...

UOB Kay Hian

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

Understanding Nanofilm (Nano SP)'s 3Cs - Customer Concentration, Competition and Management Changes

In its short listed history, Nanofilm endured significant regulator and investor scrutiny following sub-par results, management share disposals and...

Jason Yap, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)