AEMULUS (0181) - Aemulus - Rising Empire

Aemulus Holdings Berhad (Aemulus - 0181) is a growing automated test equipment player. Prior to it's IPO debut back then at 15th September 2015, Aemulus saw a peak of RM 0.60 during November 2016.

Albeit Aemulus having carved a niche market in the radio frequency (RF) test system, the share price had took severe beating in the market from volatile sentiment as well as under performing financial result. The share price succumbed to a lowly RM 0.28 during the 2H of 2016.

While the current market had been tough with margin squeeze and budget cut, how would this be a turnaround benefit for Aemulus ?

Resurgent of cost effective new contract

Increase competitiveness in the market had forced manufacturer to seek for cheaper alternatives, and this will be no exception for the semiconductor industry, especially in the test market. However, the application of electronics toward the lifestyle and living hood of the human being will continue to see an increase, and this will be the core underlying demand that will fuel the future evolution of this industry.

At the current market sentiment, the manufacturing process of a matured product will seek for cheaper alternative that can provide similar function.

While this changing landscape can be a bomb to some, it is also a boon to some. For this case, Aemulus is standing in a position that could be seeing a good score of boon in the coming days.

A practical example from the changing landscape had saw JHM as a core beneficial in the automobile LED headlamps manufacturing process.

JHM had been a major beneficiaries in securing new contracts from automobile manufacturer in the US and Europe. The effect had saw JHM ripping upwards despite the volatile equity market. Just 1 back, JHM is just trading at a lowly RM 0.15, and now JHM is trending at the range of RM 1.00.

Big Suffer, Small Flower

It is almost a common practice for big player of certain industry to sell expensive service due to their track record, resourceful man power as well as large base of support. Smaller industry player will have to fight for lower margin in order to entice for more project to "prove themselves worthy". However, the current market will see more opportunity knocking to the smaller player with the tightened cost.

Some of the market leader in the semiconductor industry like Gtronic, MPI and Inari had saw massive retreat in their share price. Of all the 3, Gtronic is the worst punished after seeing share price diving more than 50% from the peak of RM 6.90.

The retreat in share price will certainly put a reflection on stakeholder such as supplier, manufacturer, dealer, reducing their stake with changes in the supply chain.

The plunge of share price doesn't necessary reflect a drop in the demand of test service in the semiconductor industry. Human will continue to rely more on electronics, and testing services will continue to be in demand as they are crucial in the semiconductor industry.

One of the noticeable beneficiaries will be Pentamaster Corporation Berhad (Penta - 7160)

This changing landscape will not see Aemulus being left out as well.

Technical reading could had suggested that Aemulus hit base and resurrected away from the downtrend line with a fairly strong rebound that is supported with significant volume. Consolidation effort at the range of RM 0.35 had formed ascending triangle, suggesting a further break up in the coming days.

Business wise, Aemulus had started penetrating into new market such as Japan and Taiwan. Aemulus had also courted with Avago last year with it's Amoeba 4600 tester machine for enterprise chip storage.

According to familiar sources, Aemulus is in favorable condition for new deal to be secured in 2H 2016, which includes new supply contract to Avago for it's enterprise chip storage. Contract business with Avago is one of the core criteria that had lifted on Inari unceasing bull run from RM 0.40 at 2013 to RM 4.9 in December 2015 before seeing bonus issue.

Under the lead of CEO, Ng Sang Beng, can Aemulus become a replication of Inari in 2016 ?

Bone's TP : RM 0.45

AEMULUS (0181) - Aemulus - Rising Empire