Hot stock: AEM hits 2-week high; CGS-CIMB ups TP by 35% on Intel expansion
SHARES of mainboard-listed AEM Holdings hit a near 2-week high on Tuesday (Jan 11), after CGS-CIMB raised its target price (TP) by 35 per cent on Intel's expansion plans.
The research team raised its TP by 35 per cent to S$7.90 from S$5.84, representing a potential upside of 50 per cent from AEM's trading price of S$5.24.
AEM, which provides advanced chip testing solutions, is a crucial partner of Intel, which announced plans in December to invest US$7.1 billion to expand its test and assembly operations in Malaysia.
AEM's shares reached a high of S$5.28 in the afternoon, up 5.8 per cent or S$0.29 as at 1.06pm. The last time the counter closed near this level was Dec 29, 2021.
By 3.37 pm, AEM was trading 5 per cent or S$0.25 higher at S$5.24, with 5.1 million shares changing hands. No married deals were recorded, according to ShareInvestor data.
In a report dated Jan 10, CGS-CIMB said AEM's FY2023 profit could hit a new record.
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Its increase in TP is due to the increase of CGS-CIMB's FY2022-23 earnings per share (EPS) forecasts and a higher target price-to-earnings multiple of 17.94 times - a 15 per cent discount to the sector average.
The research team also raised its FY2022-23 revenue estimates by 12.6 per cent to 17.7 per cent, resulting in a 10.7 per cent to 12.2 per cent increase in its FY2022-23 EPS projections.
This reflects the research team's optimism that there is a chance for AEM to be "amongst the top 3 players globally".
To recap, Intel is looking to expand its production in Malaysia following a global shortage of semiconductors. The new advanced packaging facility in Malaysia is expected to begin production in 2024.
The RM30 billion (S$9.7 billion) investment is expected to create over 4,000 Intel jobs and more than 5,000 construction jobs in the country, the Malaysian government said in December 2021.
The global shortage of semiconductor chips - partly due to a pandemic-fuelled demand for electronics and supply chain disruptions - has seen car makers cut production and smartphone delivery delays at tech companies including Apple.
READ MORE:
- Intel to invest RM30b in new plant in Malaysia, creating 9,000 jobs
- Malaysia says US chipmaker Intel to invest US$7b in new facility
- Intel to spend US$20b on new US chip plants
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