AEM - DBS Research 2024-03-01: Uncertainties Persist Into 2024

• AEM (SGX:AWX)'s FY23 revenue of $481.3m (-44.7% y-o-y) broadly in line with expectations. The revenue decline can be attributed to
  1. the chip glut as the semiconductor industry slows down,
  2. - Read this at SGinvestors.io -
  3. a pull-in of orders for FY22 that were originally intended for FY23.

Net loss of $1.2m (-100.9% y-o-y) better than expected.

• Gross margins decreased by 4.5ppt, from 31.4% in FY22 to 26.9% in FY23, mainly due to changes in the product mix. Services, which comprise lower margin contract manufacturing, accounted for 60% of FY23 revenue, up from 28% in FY22.
• Other factors affecting the bottom line were an inventory adjustment of $21.1m and an arbitration settlement of $26.7m.
• Despite the net loss, we note that AEM fared better than our estimate of -$5-6m due to lower-than-expected SG&A expenses (-31% y-o-y).

Bonus issue

• - Read this at SGinvestors.io -

Our Thoughts

Uncertainties surrounding timing of new product ramps and pace of industry recovery cast a shadow on FY24.

• Read more at SGinvestors.io.

Amanda TAN DBS Group Research | Lee Keng LING DBS Research | https://www.dbs.com/insightsdirect/ 2024-03-01 SGinvestors.io

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