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AEM Holdings Q1 net profit drops 19.7% to S$6.6m as key customer cuts orders
MAINBOARD-LISTED precision manufacturer AEM Holdings on Tuesday posted a drop in first-quarter earnings on fewer orders from its main equipment systems customer.
Tracking the lower turnover, net profit was lower by 19.7 per cent year-on-year to S$6.6 million for the three months to March 31, with revenue also down 19.7 per cent to S$52.7 million.
Earnings per share was 2.44 Singapore cents, down from 3.06 Singapore cents. Net asset value was 35.3 Singapore cents a share, against 33.3 Singapore cents as at Dec 31, 2018.
AEM said in its outlook statement that, with production for its key customer at a mature stage, "future new equipment sales will be driven by the customer's new platform launches, their market share, and the commissioning of new manufacturing sites".
It has secured follow-on projects from the customer, which should "deliver meaningful revenue" from 2020, it added.
The group said that it has been working on diversifying its customer base, with a new memory manufacturer that came on board in 2018. It plans to build accounts with other chipmakers in 2019.
It also noted that Chinese tech giant Huawei has accepted its optical fibre cable-test solution and made another sales order for equipment delivery in 2019.
And Intel Quantum Computing commissioned AEM's Afore Oy unit to develop a wafer testing tool, which AEM took as validation of its research and development (R&D) focus for future 5G market growth.
Executive chairman Loke Wai San said in a statement that, based on its foundation in the semiconductor and communications industries, "AEM has the opportunity to establish itself as a global leader in dramatic test costs reduction for the 5G and data-centric future".
"We expect to sustain our investments in R&D, and to accelerate our sales and marketing initiatives in the second half of 2019," he added.
No dividend was recommended, unchanged from the same period the previous year.
AEM closed up S$0.01 or 0.93 per cent to S$1.09 on Tuesday before the results were announced.