Aemulus' Amoeba AMB4200, an analog/linear test system designed based on PXIe platform.
KUALA LUMPUR: CIMB Equities Research is retaining its Hold call for technology-related Aemulus Holdings Bhd
with a higher target price of 53 sen (last traded price) from 32 sen previously.
It said on Friday the target price was based on 22 times CY18F price-to-earnings (P/E), in line with the sector, vs. 10% discount previously, due to improving industry outlook.
“Key downside risk to our call is continued demand weakness. We expect Aemulus to return to profitability in FY17, driven by new tester products and a recovery in industry demand. Switch to Inari for exposure in tech,” it said.
The revenue in 2QFY9/17 rose 38.2% on-year to reach RM10.8mil on the back higher tester shipment volumes due to improving demand enterprise storage, smartphone and tablet (S&T) markets.
The group’s earnings before interest, tax, depreciation and amortisation (Ebitda) margin expanded by 9.1 percentage points on-year to reach 24.3%.
As a result of higher operating leverage, Aemulus posted a higher core net profit of RM2.4mil in 2QFY9/17 compared to RM1mil in 2QFY9/16.
In 1HFY9/17, revenue rose by 55.9% on-year due to higher tester shipment volumes on the back of a successful automated tester equipment design win for a tier-1 smartphone company and demand recovery across the enterprise storage and S&T segments.
Aemulus shipped three units of AE4600 tester in 2QFY9/17, which already exceeds the two units that it shipped for the whole of FY16.
“Overall, Aemulus recorded a core net profit of RM3mil in 1HFY9/17 against a core net loss of RM800,000 in 1HFY9/17.
CIMB Research said in terms of geographical breakdown, most key markets such as Malaysia, Singapore and the US reported healthy sales growth in 1HFY9/17.
However, China recorded a 46% drop in revenue. The group attributed the lower sales from China to timing but expects sales from China to pick up in 3QFY9/17.
“The group expects rising 4G network deployment in China to drive stronger demand for its RF testers,” it said.
Aemulus plans to launch a new enhanced radio-frequency (RF) tester for the S&T segment to replace its AE7600 models in Sep 17. The new tester is expected to offer better performance in terms of speed and productivity. In addition, Aemulus’s AE7600 RF tester was chosen in Feb 17 as the preferred test platform by US-based Energous Corp, the developer of “WattUp”, a wireless charging technology solution.
“We raise our FY17-19F EPS by 31%-72% to account for higher tester shipment volumes for the AE4600 and AE7600 models by about 15%-30%, and margin expansion from higher utilisation.
“We believe Aemulus is on track for an earnings recovery in FY17 driven by improving demand outlook in the global semiconductor industry as independent market research groups are projecting a 7% sales growth in 2017 (vs 1.1% in 2016),” it said.
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