Feb global semicon sales grew 32.4%
? According to SIA, global semicon sales grew 32.4% yoy in February 2022,
the 11th month of yoy revenue growth.
? AEM’s key customer, Intel, also launched its graphics processing chips
(Intel® Arc™) on 30 March 2022.
? Intel revealed its planned product roadmap at its 2022 Investor Meeting.
11th consecutive month of yoy growth
? The Semiconductor Industry Association (SIA) announced on 5 Apr 2022 that global
semiconductor industry sales grew 32.4% yoy (3.4% mom) to US$52.5bn in the month
of February 2022 (January 2022: US$50.7bn).
? Sales of semiconductors to USA outpaced that in other regional markets, climbing
43.2% yoy in February 2022.
? Year on year, semiconductor sales rose 29.3% in Europe, 21.6% in Japan, 21.8% in
China and 41.4% in Asia Pacific and other regions.
? On a 3-month moving average basis, global semiconductor sales for December 2021-
Februaury 2022 grew 4.8% versus September-November 2021.
AEM Holdings Ltd (AEM SP, Add, TP S$6.85)
? AEM Holdings is our top pick for the Singapore semiconductor sector.
? We note that its key customer Intel Corp (INTC US, NR) on 30 March 2022 launched
the Intel® Arc™ graphics family (of chips) for laptops. The company plans to release the
desktop and w orkstation versions of this product later this year.
? In its 2022 Investor Meeting, Intel also provided its product roadmap for data centre
chips. Intel w ill launch Sapphire Rapids in 1Q22. Other planned product launches
include Emerald Rapids in 2023 and Sierra Forest and Granite Rapids in 2024.
? Potential re-rating catalysts for AEM are upw ard revisions to revenue guidance in the
coming months and further new customer w ins.
? Upside to our FY22F earnings forecast could come from potential accretive M&A (AEM’s
cash balance as at end-Dec 2021 w as S$216.2m).
? Dow nside risks are delivery delays due to lockdow ns/movement restriction extensions
(Shanghai implemented lockdow ns in early-April to stem rising Covid-19 infections),
order pushback by customers and margin pressure arising from higher operating costs.
? Our target price is based on 15.62x [10% premium (given our FY21-24F EPS CA GR
expectation of 15.4%) over 2 s.d. above AEM’s FY17-21 historical average (7.4x)
forw ard P/E multiple of 14.2x] FY23F EPS of S$0.4384.
? A company-specific risk is an arbitration order filed against AEM in the US. In its
announcement on SGX, AEM said that, based on preliminary analysis, the claims
appear to lack factual and/or legal support. The arbitration is still in the early stages and
the claimant has not quantified their demands. The arbitration hearing is currently
expected to conclude in 2023. In the meantime, management has guided that its
operations are unaffected by the arbitration.