PETALING JAYA: Aemulus Holdings Bhd’s order book remained healthy at between RM40mil and RM50mil as at Nov 8, 2021, mainly driven by its 7300 and 7600 testers going into the mobile and tablet segment, especially in China, according to the group’s management, says CGS-CIMB Research in a report.
Aemulus is mainly involved in the design and development of automated test equipment (ATE), test and measurement instruments, and test-related services in the semiconductor industry.
“We expect higher shipment volumes for 5600 testers going into the CMOS image sensor (CIS) segment following new contract wins in the third quarter of 2021,” said CGS-CIMB Research.
The research unit has lowered its earnings per share (EPS) estimates for Aemulus’ financial year ending Sept 30, 2022 (FY22) and FY23 by 0.1% to 4.5% to reflect a gradual margin expansion, given higher contributions from the China market with a relatively lower margin.
The research unit also projects Aemulus to deliver a 43% core net profit compound annual growth rate (CAGR) in FY21 to FY24.
CGS-CIMB Research reiterated its “add” rating on the stock with a higher RM1.50 target price (from RM1.24 previously) as it rolled over its valuation to end-2022, based on 33 times the 2023 estimated price-to-earnings (P/E).
This is in line with the Malaysian ATE sector’s three-year historical mean.
The research unit added that potential re-rating catalysts include higher-than-expected tester shipment volumes from mobile, tablet and CIS segments and successful expansion into new verticals.
Key downside risks are softening demand for mobile device applications, delays in commissioning production for Aemulus’ associate company in China, and disruptions in supply chains due to the impact of Covid-19.
For its fourth quarter (Q4) of FY21, Aemulus recorded a 5.8% quarter-on-quarter (q-o-q) revenue growth.
This was driven by higher demand for its 7600 and 7300 testers from the Malaysia and China markets.
This helped to offset lower contributions from the Taiwan market following a drop in CIS tester shipment volumes q-o-q.
CGS-CIMB Research noted that gross profit margins in Q4 of FY21 expanded by 1.1% percentage point q-o-q to 55.6%.
Aemulus posted a record net profit in FY21, as revenue jumped 3.2 times to RM61.1mil driven by higher contributions from all testers segments – mobile and tablet, data centre, automotive and CIS.
The stronger sales were mainly driven by higher contributions from the China market following the setting up of its 40%-owned associate, TMSS Technology Co.
Revenue from the China market rose by nearly 11 times from RM2.2mil in FY20 to RM24mil in FY21.
Aemulus derived 39% of its sales from the China market in FY21 (versus 11% in FY20).
Following its successful entry into China and commercialisation of its new testers portfolio, Aemulus returned to profitability in FY21.