*$AEM (SGX) $SGX-AWX - Moving strongly post result. Investor briefing summary.

Institutional funds seem to be pouring in after positive investor briefing on 11/11/21... I had 3 friends attended and here are some summary:

1) Management mentioned FY22, each QR will be similar to Q3/Q4 result. This mean Q3 and Q4 FY21 numbers will become the norm for FY22. This is very bullish

2) No supply constraints as of now, AEM purchasing department has navigated all difficulties thus far

3) Expecting to land several "meaningful new client" wins in 2022. Meaningful definition: at least 5-10% of quarterly revenue. Recall that AEM mentioned in the QR report that it is working with 10 out of the 20 largest semiconductor companies. These discussions are at various stages but looks like things are close to finalisation

4) Management mentioned there will be no conflict of interest IF they win Nvidia as customer as each solution is customized. Perhaps only AMD customer win would be viewed negatively (conflict of interest).

5) Addressing on its market or TAM with Intel, it's clarified that TAM is both replacement of machines as well as the expansion of products/services.

6) Continues to look for M&A but the first focus is on expanding sales and technology team.

7) On why AEM didnt hire more sales guys to increase their market share - management answered that their approach through close engagement with end user to understand what is their need and what is the best solution for them. And then to do deep engineering with them. Through this engagement, they can go very big like what we had with intel.

8) Friend also note that there were 70-80 pax in attendance, unlike usual briefing which was below 50 usually.. and with many new insti faces. The power of temasek as a shareholder!

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In summary, The first point is very important and one the market doesn’t seem to fully priced in yet. With low range guidance target of sgd525m revenue this year, q4 revenue target is sgd190m... If this is extrapolated to fy2022, we are looking at sgd750m revenue. At a standard (and conservative) net margin of 15%, we are looking at above sgd100m PAT.

A 20x multiple points at a FV of Sgd7 and beyond.

Catalyst for higher multiples:
- AEM market cap above usd1b, attract more insti funds
- temasek as largest holder, a board representative with huge experience. Ex AMAT
- Soon to be Removal of key client risk
- medium term visibility from Intel capex expansion
- US peers bar Cohu (like kla teradyne etc) are trading above 20x fwd pe. Forget abt Malaysia valuation - which will lead us to 40x multiples haha.

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Lastly, those who wish to tune in and listen to management directly by themselves can do so tmr at 12pm. There's a free webinar.

Register here: https://bit.ly/3xa5oG7


cc: @wsoh @ValinV @zhengyou0705 @mengteck @Jinnsern