This discounts AEM’s efforts to increase the number of revenue streams through various acquisitions (MEMS testing, network cable testing, Camera sensor testing, etc.). According to the 2019 Annual Report, Loke Wai San had approximately 3.4 million options outstanding as at 31 December 2019; James Toh had none. Verdict: HOLD/Exit at a higher price and buy on the dip (to monitor ARM-based chip’s success). UG Healthcare Share Price The concept of time value of money is such that $1 in the future is worth less than it is today because of inflation, or potential interest to be earned from $1 today if it was saved/invested. This was an unexpectedly long article! Tracking the lower turnover, net profit was lower by 19.7 per cent year-on-year to S$6.6 million for the three months to March 31, with revenue also down 19.7 per cent to S$52.7 million. AEM Holdings Value Proposition Back-end test-equipment manufacturer that has co-developed the HDMT handler for a market-leading chipmaker with a market cap of USD210b. As such, ARM has been the preferred CPU for mobile devices due to its efficiency and design flexibility. AEM the volume so low unlikely moving up with such a small quantity eatup. a. AMD catches up to Intel’s lead in the CPU market. We see FY21E as a growth year for AEM, driven by new products across customers including Intel, Huawei. However, data center competition is starting to intensify with AMD’s acquisition of Xilinx and Nvidia’s acquisitions of Mellanox and ARM. US-China trade tensions), disruptions to operations (e.g. Following the sell-offs sparked by insider sales and global tech selloffs, AEM announced that it is raising revenue guidance from S$460m – S$480m to S$480m – S$500m for FY2020. For an apple tree, these risks include disease, possibility of drought /fire/war, and potentially wilting. In the event that you choose not to seek advice from such advisers, you should consider whether the product in question, or any course of action recommended, is suitable for you. We now value AEM Holdings at 14x FY21E P/E, from ROE-g/COE-g derived 5x blended FY20-21E P/B, to better account for: . Mu-TEST is ISO 9001 : 2015 Certified - Feb. 19, 2018 AEM’s products come into the picture for the “testing” phase. According to various sources, the rationale for Intel to carry out this deal include the following: Having caught up with the latest developments, here’s my take on how this is likely to affect AEM from a commercial point-of-view: Overall, I remain cautiously optimistic that AEM Holdings still has a lot of room to grow given that memory chips/SoC test equipment competitors like Teradyne (Intel’s other Automated Test Equipment (ATE) supplier) and Advantest (AMD’s ATE supplier) are about 10x bigger. Here, we bring in the concepts of (1) time value of money / opportunity cost, and (2) risks. On top of being the value-for-money alternative, AMD recently announced its Ryzen 5000 series chips and claimed that it is the “world’s best gaming CPU”, taking a direct shot at Intel’s Core i9-10900K processor, which Intel boasted as the “world’s fastest gaming processor”. Since the August-high of S$4.29 (closing price), AEM’s share price has fallen by about 19% to S$3.47. Also, we have to account for the risks associated with buying and growing Apple Tree X. Tech stocks closed out a ‘nightmare’ September with the tech-heavy NASDAQ shedding ~5% as Big Tech stocks took a nose dive. As this turned out to be a very lengthy article, these developments are summarized below: In early September 2020, we caught a glimpse of a rotation out of the tech sector when news of a working vaccine were published. Why is Intel selling the NAND business? The push for 7-nm chips will also likely require new kits and pans (consumables) for the testing of the new range of chips. This represents another key event that the market will likely react negatively to in 2021. Comparable Company Analysis: Selected APAC Semiconductor Test Handler Equipment Providers. About AEM Electronics. Nvidia’s growth had been largely fueled by the demand for GPUs, the main computing unit used to power accelerated computing systems, such as AIs, autonomous vehicles, super computers, etc.. Shift to ARM-based processors to benefit Nvidia at Intel’s expense. Teradyne and Cohu are NASDAQ-listed while Advantest is listed on the Tokyo Stock Exchange (TSE), making them much more accessible to global investors (i.e. Become a Dealer. In essence, options granted to Loke Wai San gives him the right to buy additional shares of AEM Holdings at a discounted price. As the saying goes, “a bird in the hand is worth two in the bush”. Notably, AEM’s GP and EBITDA margins fall below larger peers like Teradyne and Advantest (although it is arguably close to the peer average). General Technical Service … I expect the market to take this news badly and oversell AEM. Intensifying competition in the PC-centric space (particularly CPU) is likely to push Intel to accelerate the development of 7-nm chips as well as other top-tier and mid-range chips to rival AMD. Sales Department -sales@aempower.com. Once government approvals have been obtained, SK Hynix will acquire from Intel the NAND SSD business, the NAND component and wafer business, and the Dalian NAND memory manufacturing facility in China, with the first payment of US$7b. In all likelihood, the rapidly expanding DC market and AEM’s new revenue streams from its multiple acquisitions (MuTest, DB Design, UTAC) will likely prop up AEM’s performance. Should Intel engage in more share buybacks in the coming week/months, it will be a worrying sign for AEM shareholders as Intel is coming under fire at the moment. AEM Holdings, in the recent past, has benefited from its solid business with just one … Below is the projected 3 financial statements used in the calculation of free cash flows to firm (FCFF). For example, in June 2020, an Arm-powered supercomputer, coupled with Nvidia’s Telsa V100 GPUs, took the Supercomputing Top500 performance crown. Furthermore, should Intel opt to exit its chip manufacturing business and outsource it, this will likely play to AEM’s advantage as more chips will be produced and, hence, tested. We help our customers deliver many of the most successful products in the 5G economy including microprocessors, high speed communications, IOT devices, and solar cells. Now, let’s move on to the financial analysis. And that came in the form of Executive Chairman, Loke Wai San, selling a combined c.1.2 million shares of AEM (announcement 1, announcement 2, announcement 3). AEM’s major customer has been building up its presence in other segments, such as server chips, given the sustained decline in the computing market. While this may sound like good news, Teradyne and Advantest are about 10x larger than AEM. During the great inflation of the 1970s, stock market valuations collapsed as interest rates soared, leaving the Dow Jones Industrial Average trading relatively flat between 1965 and 1980 (Source: With the exception of Cohu, the global peers are much larger than AEM (in terms of revenue and market capitalization). With assumptions of growth rates, margins, exit multiple and discount rates made, we get an implied price per share of S$3.90. To my understanding, Optane performs the same functions as chips in flash-based thumb drives, but (1) runs faster than most flash memory and almost as fast as the DRAM chips used in PCs and servers, (2) has lower latency and (3) has better endurance than NAND flash memory. This is akin to saying Apple Tree X is worth $10 today because it will likely bring in $1 every year for the next 15 years. b. b. AMD looking to acquire Xilinx for FPGA technology, Akin to Intel’s US$16.7b acquisition of Altera in 2015, AMD’s proposed acquisition of Xilinx for US$30b is aimed at moving AMD’s focus from desktops and consoles to FPGA technology, which are crucial to server chips used in data centers. Dealer Locator. Intel is planning to sell its NAND memory business to SK Hynix. (310) 484-2322. In July 2020, AMD CEO Lisa Su announced that AMD has successfully surpassed 10% market share in the profitable server chip market. Regardless of how rosy MEMS, 5G, IoT or AI trends look, I will prefer to err on the side of caution and continue to monitor developments in this space. b. AEM adds customized tester development capabilities as it acquires 100% stake in Automated Test Equipment (ATE) company – Mu-TEST - Jan. 28, 2020. Sales Department sales@aempower.com. While I have not followed this market for long, it seems clear that engaging in acquisitions to break new ground is the name of the game. For a company, this ranges from political risks (e.g. The greater worry is the possibility that other customers may also adopt an approach of designing their own chips. Beside supercomputing, this acquisition will allow Nvidia to compete in the data center space by allowing it to offer complete platform solutions alongside its GPUs offerings for ML, AI, cloud and big data applications. Leading-edge HDMT technology has helped its core customer achieve 2x savings in chip-testing costs. Furthermore, s. , this will likely play to AEM’s advantage as more chips will be produced and, hence, tested. Importantly, the chart below shows Intel was making losses in 4Q17, 3Q18, 2019 and 1H20 when most of its peers were enjoying a healthy operating margin. Downgrade DBS OCBC UOB To SELL. This is not to say that AEM’s performance will collapse as Intel loses market share, but. Intel Corporation happens to be a key customer contributing 80% – 90% of its revenue. Top Glove Share Price An unclear path to restore market leadership and a seemingly inevitable fall in valuations across the sector/market will continue to keep me on my toes. Aem Holdings (AEM SP) reported solid FY18 results and gave a decent outlook for FY19. Small quantity eatup on this site are for the risks associated with buying and apple! 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