AEM - DBS Research 2024-05-10: Two Sides To A Chip ~ Key Customer Weakness, New Customer Growth

• AEM (SGX:AWX)’s top line was impacted by
  1. slower-than-anticipated recovery at the key customer and
  2. softness in contract manufacturing given the inventory build-up in the life science and industrial sectors.
• - Read this at SGinvestors.io -
• We believe that the steep decline in test & automation equipment sales could be due to the low utilisation rates of test equipment that its key customer Intel had pulled in during FY22.

Revenue consistent with our projections but earnings was a miss.

• AEM's 1Q24 revenue came in at S$94.2mil (-38.3% y-o-y), in line with our estimates, accounting for 23% of our revised FY24F estimates and 51% of 1H24 guidance of S$170-200mil.
• - Read this at SGinvestors.io -
• AEM also undertook a restructuring charge of S$2.1mil following a reorganisation exercise in 1Q24.

Our thoughts on AEM's performance

Semiconductor test market shows uneven recovery; uptick only from 2025 onwards

• Read more at SGinvestors.io.

Amanda TAN DBS Group Research | Lee Keng LING DBS Research | https://www.dbs.com/insightsdirect/ 2024-05-10 SGinvestors.io

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