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Robust order visibility ahead for AEMULUS (0181) AEMULUS HOLDINGS BHD, says CGS-CIMB

KUALA LUMPUR (Feb 9): CGS-CIMB Research foresees stronger earnings delivery in the coming quarters for Aemulus Holdings Bhd driven by healthy order book replenishment and better traction from its associate in China.

The research house estimates the group’s order book hovered at nearly RM30 million at the end of January 2021.

In a note today, CGS-CIMB analyst Mohd Shanaz Noor Azam said Aemulus is in the midst of qualifying new customers in China which could translate into robust order book growth to drive sales in 2QFY21 onwards.

According to Mohd Shanaz, Aemulus had a strong start in 1QFY9/21 where the group’s revenue jumped 2.6 times year-on-year (y-o-y) from RM4.4 million to RM11.5 million, which is the highest quarterly revenue over the past 13 quarters.

He pointed out that the group attributed the stronger sales to higher contribution from its new testers portfolio — the AMB 7600, AMB 7300 and AMB 5600 — which contributed 69% to the group’s 1QFY21 revenue.

Moreover, the group reported its 40%-owned joint venture in China, TMSS Technology, gained good traction and its shipments of radio-frequency (RF) testers to Chinese customers had contributed RM3.7 million or 47% of sales in 1QFY21 (vs. 7% in 1QFY20).

The research house also noted that Aemulus is launching its updated version of the 7300 RF filter tester on July 21 which will utilise higher local content using Aemulus’ own design IP and testing methodologies.

“This is part of the group’s strategy to increase the local content of its testers portfolio in order to participate in the Made in China 2025 initiative as customers in China will look at the testers components’ country of origin, which is one of the preferred criteria.”

“Essentially, this will give Aemulus an advantage when competing in China’s semiconductor tester market,” it said.

Overall, Aemulus posted RM1.5 million headline net profit in 1QFY21 against RM2 million headline net loss in 1QFY20.

The group also registered a higher RM1.9 million core net profit in 1QFY21 (vs. RM2.6 million core net loss in 1QFY20).

Mohd Shanaz maintained his "add" rating at 83 sen and target price of 95 sen based on 32 times CY22F price-to-earnings ratio, 0.5 standard deviation, above the sector mean of 28 times.

At the time of writing, Aemulus shares rose 2.41% or two sen to 85 sen, valuing it at RM515.07 million.


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