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!

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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

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what happen? keep cheonging. Someone taking it private ?


Reply to @paullim : Good advice - I agree. Don't FOMO and chase the share price up.

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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


Conclusion is int the long run ,comfort still safer than AEM


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

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Realising a trend here. Tech companies are not giving a large one off special dividend even though 2017 was such a bull year. The feel I am getting is that they are hoarding a cash for working capital and also ramping up of production.

They could also be using the cash for more meaningful M&As.

What do you guys think?

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Realising a trend here. Tech companies are not giving a large one off special dividend even though 2017 was such a bull year. The feel I am getting is that they are hoarding a cash for working capital and also ramping up of production.

They could also be using the cash for more meaningful M&As.

What do you guys think?

Read more

$AEM(AWX.SI) AEM outdid itself again.

Guided 215m revenue and 35-37m PBT for FY17.
Delivered 221m revenue and 36.8m PBT for FY17

Final total dividend of the year is $0.12, which equates to 25% of NPAT and about 1.9% at today’s closing price.

Bonus shares of 3 for 1. This means that if you hold 1000 shares worth $6.36 each, you will have 4000 shares worth $1.59 each after the bonus issue.

This is exciting as - 2 months after the previous bonus issue in June 2017, institutional investors came in to buy up 4.2% of the issued and paid up shares.

We dont have to be geniuses to figure out how much gains they are sitting on now. I foresee more institutional investors coming in for AEM.

Felt that the management could have given a normal dividend, and also a special dividend to reward its shareholders. Total dividend of 0.20 or 0.25 would have been nice - keeping it less than 50% of earnings. But I am not complaining much because they are giving a 3 for 1 bonus issue, compared to a 1 for 2 in the same period last year.

Management probably felt that they has better use of the cash, which i will touch on.

4Q17: 29m OCF
FY17: 49M OCF

Final cash amount: 46M cash

They generated $0.44 cash per share for 4Q17 and $0.744 cash per share for FY2017.

11% of total market cap is cash. And this number will keep growing. A very good indication is that the management is using these cash to acquire cash generating companies, and we will see the fruit in the coming FY.

Forward looking statements:
AEM: 42m PBT as per guidance
IRIS: 460k PBT without growth
Afore Oy: 1.2m PBT without growth

If we follow CIMB’s target EPS of 0.66 and give it an industry average PE of 12.2x, this counter will trade at $8.00, which is a 25% upside of today’s price. Of course this counter can trade at a PE of 13-15x given how bullish the semicon industry is currently.

I am still bullish on AEM even as it is about fairly priced right now.

During this whole article, i have not increased their profit margins nor sales orders, which I have no doubt they will outperform again.

Believe that they will continue beating guidance and have more sales orders/guidance beats in the near future.

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Target Price

Let me make another bold estimate based on the following news:

1. Increased earnings for FY17
2. Superb guidance for FY18 and improving
3. Increasing order books
4. Increasing cash flow
5. Synergy of acquisitions
6. Entrance of more institutional investors
7. Better investor sentiment for this company
8. Possible Bonus Shares and good special dividend
9. One of the best management in SG I have seen
10. Riding on 5G and IOT together with key customer

1. Overeliance on 1 customer, still in the midst of diversifying
2. Stock priced for perfect execution?
3. Customer order pullback will be disastrous

With all these, do you think the pros outweigh the cons?

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As many investors here have positions in $UMS(558.SI) , i have decided to come up with a Fundamental Analysis of the company myself. Here are some of the things i read up on, and a little macro trend going into 2018.


A) Revenue, Profit, Margins and Cashflow:

As UMS gets majority of its revenue from AMAT, AMAT estimated a strong 2018 and strong demand up to FY2020. This bodes well for UMS, as they get consistent demand from AMAT under their signed contract.

In 2018, UMS also moves to the completed Penang facility, from which we can see its margin significantly improve as there is a lower operating cost there. The facility was completed in 3Q2017.

Looking at the sudden surge in inventory ($10m) on its 3Q2017 balance sheet, I am predicting that the company is looking at a super high sales number for 4Q2017, hence dramatically increasing inventory to cater to it. Therefore, one of the things i am expecting to see is a huge burst in revenue in the coming quarterly results.

As of 3Q2017, they have 64 million in cash - that is equivalent to almost $0.15 per share of CASH. After deducting the cash used in acquisition and dividends paid in the previous quarter, there is still a good 32 million of cash, equivalent to 7.4 cents per share.

If this coming quarter is going to be explosive, it will not be a surprise if UMS pays out 5-8 cents special dividend this coming quarter on the back of healthy cashflow.

B) On semiconductor trends:

"According to SEMI’S Forecast, 2017 fab equipment spending (new and refurbished) is expected to increase by 37 percent, reaching a new annual spending record of about US$55 billion. The World Fab Forecast also forecasts that fab equipment spending in 2018 will rise further by another 5 percentage points for a new high of about US$58 billion. The last record spending was in 2011 with about US$40 billion. The spending in 2017 is now expected to top that by about US$15 billion.*

These trends augur well for the Group. This is further supported by the robust results of our major customer who has recently posted a sterling 3QFY2017 performance and has projected accelerated growth in the coming quarter. The outlook for the Group remains bright. The Group has a strong pipeline of orders from its key customer and will benefit from cost savings by shifting its system integration operations from Singapore to its expanded facilities in Penang as well as higher production output in Malaysia. "

It seems that moving forward, UMS is going to do extremely well not just in 2018, but in the many years to come.

C) On JEP acquisition:

"Additionally, JEP recently opened its new 200,000 sq ft state-of-the-art facility in Seletar Aerospace Park., which also offers UMS additional production capacity for immediate expansion to capitalise on the current semiconductor industry boom. JEP also provides tooling services and distribution. "

I believe more than JEP providing more production for UMS, it is going to be a strategic acquisition to bring in more profits through its own JVs and production in the aerospace industry.

D) Conclusion:

Believe that with such a high growth, UMS deserves to be trading at a premium.

TP of $1.35 - $1.60. This is on the assumption of a $200 million revenue, and a $58 million NPAT for FY2018.

Lets ride the boom together!

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