- AEM (SGX:AWX) reported record-high half year revenues of S$540.5m in 1H22 (+181% y-o-y, +45% h-o-h). The surge in revenue can be attributed to the ramp up of the new generation SLT (system level test) handlers, burn-in test handlers, increased sales of consumables and tools, as well as contributions from CEI (SGX:AVV).
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- Revenue guidance revised upwards a second time, 6-7% higher at S$750m-S$800m. AEM's guidance hints at a weaker half. 1H22 revenues made up 68-72% of the full year guidance.
Our Thoughts
Growth in test spend continues to be a key driver for AEM.
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- AEM expects that the Test 2.0 market could potentially grow 8x over the next 8 years, in line with VLSI Research’s view that SLT is expected to grow 4.4x faster than wafer sort and functional test in 2020- 2024 on the back of higher test coverage reliability.
- Overall, we think that AEM is well-positioned to ride this trend given its lead in the SLT market.
Supply chain disruptions still likely to weigh on margins.
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