AEM (SGX:AWX)'s 9M23 revenue of S$387.0m (-48.2% y-o-y), largely in line with expectations. 9M23 revenue weakness is largely attributed to customers pushing out their test-related capex to 2024 and beyond, amid an industry downturn along with an absence of a ramp-up in products vs 9M22.
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For 9M23, services (+18.3% y-o-y), which primarily consist of contract manufacturing, were more resilient compared to consumables (- 60.6% y-o-y) and equipment (-80.6% y-o-y). AEM also maintains its revenue guidance of S$460-S$490m.
9M23 earnings account for 17.4% of our estimates.
AEM reported 9M23 earnings of S$3.5m (-96.9% y-o-y), below our estimates even after accounting for one-off arbitration expenses of S$26.7m. 9M23 net profit margin of 0.9% took a hit, as AEM fully recognised the arbitration expenses in 3Q23. Excluding this significant one-off, the profit before tax (PBT) margin would have been 11.0% vs 2.6% after exceptionals.
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Our Thoughts
Worst is likely over in terms of earnings, but recovery could be delayed till late 2024.
Read more at SGinvestors.io.
Above is an excerpt from a report by DBS Group Research. Clients of DBS may access the full PDF report @ https://www.dbs.com/insightsdirect/.
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