<News Analysis> AEM Holdings (AEM SP): FY22F revenue guidance of S$670-720m; Expect further upward revisions later this year

  • Management has provided FY22F revenue guidance of S$670-720m, in line with our forecast of S$777m
  • Industry momentum remains strong and we expect upward revisions in guidance later this year
  • US Semiconductor Equipment Billings recorded a 49.9% y-o-y growth in November, marking its 26th consecutive monthly increase
  • No changes to recommendation and TP; We currently have a BUY recommendation and TP of S$6.04.

What’s New
AEM announced that it is expecting:

  • FY22F revenue to be between $670-720m – we are currently forecasting FY22F revenue to be at S$777m;
  • FY22F capex to be S$10m;
  • Margin compression in FY22F in view of higher supply chain costs and an increase in R&D to engage customers on new projects

Our Thoughts
While our current FY22F revenue forecast may be slightly outside of Management’s guidance, we believe that the general magnitude and direction is in line with our view. In our latest report, we have highlighted that the bullishness from its key customer (Intel) will drive its spending on equipment, which will flowthrough to AEM. The momentum in the semiconductor industry remains strong as we observe from the US Semiconductor Equipment Billings data, recording a 49.9% y-o-y growth in November 2021, marking its 26th consecutive monthly increase.  

US semiconductor equipment billings continues to drive AEM’s share price

Source: Bloomberg Finance L.P., SEMI, CEIC, DBS Bank

In addition, we note that Management has generally been conservative in providing its financial guidance (only choosing to do so when they have more or less secured their orders) and has revised its revenue guidance several times upwards in a good year and the actual revenue figures may be a lot higher than the initial guidance.
Management’s Past Revenue Guidance

YearInitial Guidance (S$’m)Final Guidance (S$’m)Actual (S$’m)Final Guidance – Median of the Initial Guidance
2019180-210305-31532365.7%
2020330-350500-52051952.6%
2021460-520525-550549*9.7%
2022670-720N.A.777*N.A.

Source: Company, DBS Bank
*Our estimates
No changes to earnings, recommendation and TP as we believe Management’s guidance would be revised upward later this year;We currently have a BUY recommendation and TP of S$6.04.