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Hot stock: AEM Holdings up 6% to S$0.80 on positive Q3 earnings

SHARES in mainboard-listed AEM Holdings have advanced by 6 per cent during Wednesday's trading session, with the tech solutions provider's stock advancing S$0.045 to S$0.80 as at 4.40pm.

It was among the Singapore bourse's most heavily traded stocks on the day with some 13.8 million shares changing hands.

The gain comes on the back of positive third-quarter earnings posted on Tuesday after market closure.

For the quarter ended Sept 30, AEM's net profit grew 46.8 per cent to S$12.4 million from the preceding year. Meanwhile, revenue surged 45.7 per cent to S$84.7 million.

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The company attributed this to higher revenue earned from its equipment systems solutions business mainly due to higher equipment and pans sales.

In October, AEM revealed that it will provide test solutions developed in collaboration with China Electronics Technology Group Corporation No 23 Research Institute for qualifying high-performance short reach cabling links for Huawei's 5G backhaul network and intends to deliver the first test solution for this contract in 2019.

With regard to its AMPS (Asynchronous Modular Parallel Smart platform) initiative, the company expects to deliver its first commercial solution to a memory manufacturer - who was not named - in early 2019. It also has plans to develop accounts with other semiconductor manufacturers in 2019.

CIMB-CGS analyst William Tng on Wednesday upgraded his call on AEM from "reduce" to "hold" with the expected slowdown for demand for its test handler product after FY2018 priced in.

He added: "Our FY2019-20 earnings per share forecasts are raised as we lower operating expenses given thecommitment to manage the costs in line with business volatility."

Catalysts to CIMB-CGS's view are stronger-than-expected orders from its major customer and sizeable order wins in its business with Huawei. Meanwhile, downside risks include a worse-than-expected order slowdown and slow pace of progress in its business with other customers.