Following the earlier announcement of order win for its its next-generation Automated Burn-In (ABI) test system from a major fabless provider of high-performance compute (HPC) and artificial intelligence (AI) semiconductor chips on 3 April, AEM announced another order win this week by another (or is it the same?) major fabless provider for their advance System Level Test (SLT) insertions.
Of course, it is still early days and it will take some more years before the contributions from these snippets of success become meaningful. However, these small order wins provide indication that the group is moving in the right direction.
“As for customers diversification, Chairman shared internally they don’t think in terms of numbers but instead their focus is on how to win customers. CEO shared that their ideal is for everyone to grow. It does not matter if the growth comes from their main customer or from new customers. In another response, Chairman said it takes about 5 years to reach a deal in the semiconductor industry but once they win the contract, that itself would become a moat.“
Above was what I shared in last year’s post AEM AGM 2023, and I perceived that there is alignment with what they said to what they are doing. So the recent order wins provided me some confidence that they might be able to go back on to growth track in another few years time.
The above forecast is obtained from DBS Treasure page. Just in case you are wondering, nope, I am not a member of DBS Treasure. The page is actually available for public. If the forecast is close to the actual results, then the EPS in FY2025 would be around 27 cents. So at today’s closing price of $2.35, that’s a PE of only 8.7x for FY2025. That is cheap especially IF there are further growth in FY2026 and FY2027.
What about the last year boo-boo on the “settlement in confidential arbitration” and “shortfall of inventories”?
It was definitely not acceptable for a listed company to make such mistakes. However, looking at it from another perspective, they came clean about it. Hence, in a way it does add creditability to what they said. Also, if not for these incidents, I probably can’t buy the shares at the current price.
My assumption is that what happened last year are one-off and they have learnt from the mistakes, so the chance of recurring would be low.
I would be attending the AGM tomorrow and hopefully there are further insights to be glimpsed from the meeting. In the mean time, I do think their responses to substantial and relevant questions provides a pretty good read.