With my divestment of $ComfortDelGro(C52) I have bought into $AEM(AWX) at a price of $2.75. :) Here is my brief coverage of this company.
I previously held this counter and released all I had at a price of $2.65. After a barrage of good news, I decided to enter the foray once again.
Throughout this entire coverage, I am assuming a profit margin of only 9%, which is a tad lower than their Q12017 profit margin of about 9.8%. Therefore, all my calculations here will be UNDERSTATED if they were to improve their profit margins, which has been the case over the last few years.
What I am also assuming is that there are no further sales order received from customers, which is almost zero probability.
Ready to read on? LETS GO!
"The Company is pleased to announce that it has received as at 31 May 2017, sales orders worth S$182 million for delivery in FY2017. This represents an increase of S$30 million in sales orders received over the previous sales order received announcement made on 18 April 2017."
With a profit margin of 9%, $182m of revenue equates to $16.38m of profit, which averages out to $5.46m per quarter. Adding q1 earnings, total year earnings will be 20.5 million, which equates to an EPS of $0.32.
With such an EPS, the share price of $2.72 represents a PE ratio of ONLY 8.6x. Everyone knows that this is an INSANELY low PE ratio, and that the market has not fully priced in the growth that is to come.
Even if it goes to an undemanding PE ratio of 12x, the price would have already grown to $3.8. I personally do not think that the management would allow the stock to escalate to that price, and they would issue bonus shares to improve the liquidity of the shares.
To give a comparison, $Micro-Mechanics(5DD) is trading at a PE ratio of 13x and $UMS(558) is trading at 17x (Info extracted from Stockfacts, correct me if I am wrong.)
What else do we want? It does not stop here! The company states - "Thirdly, with clear visibility of growth into the next few years, we intend to adopt a dividend policy to pay annual dividends, including interim dividends, of not less than 25% of profit after tax excluding non-recurring, one-off and exceptional items."
With a minimal profit estimation of AT LEAST $20million, 25% profit means $5m paid out, which equates to a dividend of at least 2.8% for an insane growth company.
To top it all of, institutional investors are buying in to AEM as well. "is pleased to announce that several long-only institutional funds have bought AEM shares and have become new shareholders. The institutional funds took up 2,737,800 shares at $2.70 a share from Orion Phoenix on 5 June 2017."
With this massive inflow of funds, I believe that AEM will attract many more institutional investors. I do not see Orion Phoenix reducing the percentage of their shares any further. With Institutional Investors buying at a price of $2.70, there is a major support there and I only see the price going up.
This is only the beginning of AEM!
Seems quite strong today.
If you bought at 67c ytd, you already made a 10% profit
Reply to @Salvatore : I am holding cash mostly now. watching the market closely. this trade war has created some havoc in the market. Opportunity ahead.... I am waiting
what happen? keep cheonging. Someone taking it private ?
Reply to @paullim : Good advice - I agree. Don't FOMO and chase the share price up.
Today's run up is a welcoming surprise. Hope it stays above 70c.
so now unrealuzed lost?
Current PE - 5.32.
Major customer probably coming in.
Current state: high risk high return
Reply to @Salvatore : Welcome Bk Salvatore!
Conclusion is int the long run ,comfort still safer than AEM
Reply to @BetterStill : hi bro haha
a more than 50%. scary
where is he now? last time rub salt on comfort. now karma. teach us to be humble. lol
Reply to @DividendHermit : i think he have divested and laughed all the way to bank d...
i dont find him not humble leh. he just state the fact he divested CDG and changed to AEM.
AEM likely to post a sharp decline in earnings for 2019 as hinted by management and analysts
This is a cyclical stock for trading, not suited for buy and hold forever strategy
The 10 year tech boom is over and down cycle has begun
My fair value for this cyclical stock is 1 times book, thus my 200,000 short position
No hard feelings, cheers ^^
Reply to @thamwk : no more shorting already, now bargain hunting property counters and banks