AEM Holdings Boosts 2H2024 Guidance Amid Profitability Improvement
AEM Holdings Boosts 2H2024 Guidance Amid Profitability Improvement
AEM Holdings Ltd., a global leader in application-specific test and handling solutions for semiconductor and electronics companies, has reported significant updates in its 3Q2024 Investor Update. The company has delivered a profitability improvement and has increased its 2H2024 guidance due to a customer pull-in for inventory management.
Key Financial Highlights
The Group reported a revenue of S\$74.2 million in 3Q2024, representing a 6.5% decrease compared to 2Q2024. However, Profit Before Tax (PBT), excluding exceptional items, came in at S\$0.9 million, showing a 3.5% improvement from the previous quarter. The company has adjusted its 2H2024 revenue guidance to a range of S\$190 million to S\$210 million, up from the previous guidance of S\$160 million to S\$180 million.
Revenue Mix
Test Cell Solutions (TCS) revenue was down 16.6% quarter-on-quarter, while Contract Manufacturing grew by 5.3%. For the total revenue mix, Test & Automation Equipment, Consumables, and Services showed a slight decline, but the overall revenue mix remains diversified.
Financial Position
As of September 2024, AEM’s cash position was S\$47.1 million, down 40.4% from June 2024. Inventories remained largely unchanged at S\$334.1 million, with trade and other receivables increasing by 6.6% to S\$71.6 million. The company’s total assets stood at S\$646.7 million, while total liabilities were S\$172.9 million, down 11.9% from June 2024. The company maintained a stable capital structure with a debt-to-equity ratio of 0.2x.
Strategic Initiatives
AEM has announced the commercialization of its expanded AMPS platform, which features both burn-in and system level test for AI/HPC applications. The company has also outlined a mid-term 4-point strategy to drive growth and shareholder value:
- Revenue growth from customer and market segment diversification
- Achieve operational excellence
- Continue to invest and retain Test 2.0 leadership
- Foster talent and culture to consistently deliver results
Market Potential
AEM is well-positioned to capture a significant share of the US\$8 billion test market, driven by AI and advanced packaging demands. The AI semiconductor market is projected to grow from US\$53.4 billion in 2023 to US\$119.4 billion by 2027, presenting substantial growth opportunities for the company.
Technological Advancements
AEM’s proprietary PiXL™ Thermal Engine is a critical enabler for AI and advanced packaging testing, offering unmatched capabilities that result in significantly lower costs of testing for customers. The technology is designed to handle increasing power requirements and package sizes, enhancing test quality and reducing test times.
Investment Highlights
AEM continues to serve a large and high-growth market for advanced package burn-in and system level tests. The company is diversifying its customer base and market segments within its Test Cell Solution business and is expanding into diversified vertical markets through its Contract Manufacturing business. With differentiated products to address the complex testing requirements for AI/HPC devices, AEM is poised for sustained growth.
Disclaimer: This article contains forward-looking statements that are subject to risks and uncertainties. Actual future performance, outcomes, and results may differ materially from those expressed in these forward-looking statements. Investors are advised to consider the risks and uncertainties involved and not to place undue reliance on these statements.
View AEM SGD Historical chart here
