Daily BriefsSingapore

Singapore: AEM, Ascendas Real Estate Investment Trust and more

In today’s briefing:

  • AEM: Temporary Weakness Creates Buying Opportunity Going into New Product Cycle as of 3Q21
  • Ascendas REIT Placement – Smaller than the Last Deal, Should Be Accretive as Well

AEM: Temporary Weakness Creates Buying Opportunity Going into New Product Cycle as of 3Q21

By Nicolas Van Broekhoven

AEM (AEM SP) posted 1Q21 results which were relatively soft YoY. Management noted that 1Q21 was still much stronger than 1Q19 and 1Q20 was an anomaly. AEM also shared annual guidance between 460-520M SGD for 2021. This was the first time management shared guidance for the year. Given AEM’s history we believe this guidance is conservative.

During the call the CEO and CFO were confident that growth would significantly pick up from 3Q21 as its largest customer Intel Corp (INTC US) ramps up requirement for its latest test handlers. Longer term the company is hopeful to announce multiple new significant customer wins by 2022. This has been a multi-year process which could now bear fruits next year and would be an important catalyst for the company. We remain convinced AEM also becomes an M&A target at some point which provides downside support to the stock.

Nothing in 1Q21 results changes the long-term bull thesis on AEM. Fair Value remains unchanged 5 SGD (40% upside). 



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