AEM Holdings has reported a notable increase in its net profit for the first half of 2025, with figures rising by 283.9% year-on-year to S$3.2 million. This growth comes as CGS International resumes coverage with a Hold call, following a previous Reduce rating. Despite a foreign exchange loss of S$5.9 million and an inventory provision of S$4.1 million leading to a S$0.3 million loss in the second quarter, AEM’s revenue for the period reached S$190.3 million, aligning with its guidance.
The company’s test cell solutions segment, which accounts for 62% of its revenue, saw an 18.8% year-on-year increase, driven by the deployment of its AMPS-BI solution. However, the contract manufacturing segment experienced a 4.7% decline due to global trade uncertainties.
Looking ahead, CGS International expects its AEM’s earnings outlook to improve in the fiscal years 2026 and 2027 as demand from new customers gains momentum. The company has guided for second-half 2025 revenues of S$170 million to S$190 million, with potential impacts from US dollar weakness and order pull-ins from key customers.
AEM’s strategic focus includes ramping up production for a major AI/HPC customer and exploring volume production opportunities with a memory customer. The company’s valuation has been adjusted to a target price of S$1.44, reflecting a 12.1x FY27 forecasted price-to-earnings ratio.
The semiconductor industry is projected to continue its growth trajectory, with global sales expected to reach $728 billion (US$728 billion) in 2025. AEM’s future performance will depend on the successful delivery of new customer orders and the broader economic environment.
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