Broker Name: DBS
Date of Report: June 2024 (inferred from context)
Excerpt from DBS report.
Report Summary
- AEM continues to benefit from AI tailwinds and new customer traction, with further upside potential from hyperscaler and Intel Foundry Services (IFS) opportunities.
- The company’s risk-reward remains positive, supported by strong growth, improving diversification, and favorable sector dynamics, justifying a higher valuation multiple.
- AEM trades at a discount to global peers, with a 26x FY27F earnings multiple compared to peers at around 34x, and a low PEG ratio based on strong earnings growth.
- Despite a 117% rally year-to-date, AEM is still viewed as attractive, with fundamentals strengthening and earnings expected to rise as diversification progresses.
- Hyperscaler/IFS contributions are seen as potential catalysts not yet reflected in forecasts, and AEM has received the Intel Epic Supplier award, enhancing its partnership potential.
- AI and new customer tailwinds remain supportive, and AEM’s high-parallel test equipment is well-positioned for hyperscaler needs.
- The semiconductor and AI upcycle is gaining momentum, and Singapore tech stocks continue to outperform, with AEM’s sector outperformance expected to continue.
- Valuation is revised upward, with a new target price of SGD4.60 (from SGD3.30) and a higher earnings multiple to reflect improving visibility and growth prospects.
- AEM’s valuation remains undemanding compared to global peers on a 12-month forward PEG basis.
- Maintain BUY rating, as risk-reward remains skewed to the upside.
above is an excerpt from a report by DBS. Clients of DBS can be the first to access the full report from the DBS website:
https://www.dbs.com
