AEM - Maybank Research 2023-05-15: Dark Clouds Still Present; Maintain SELL

• AEM (SGX:AWX)'s 1Q23 revenue and NPAT sank 42% and 62% y-o-y to S$152.7m and S$15.6m, respectively, 16% below our estimates.
• Management retained its S$500m FY23 revenue guidance and will only have more clarity after July or August 2023. As a result, we cut our respective FY23 and FY24 PATMI forecasts by 8.2% and 8.3% as AEM’s margins will likely face pressure from lower operating leverage and potential margin squeeze by its main customer.

PBT and net margin pressures prevalent

• - Read this at SGinvestors.io -
• Management has taken proactive steps to lower operating costs and increase operational efficiency.

New customer engagement on track

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• High inventory levels show signs of a potential turnaround but timing will be the key.

Short-term outlook still bleak

• Read more at SGinvestors.io.

Jarick Seet Maybank Research | https://www.maybank-ke.com.sg/ 2023-05-15 SGinvestors.io

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