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Friday, February 1, 2013

AEM HOLDINGS

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# 3 AEM HOLDINGS

AEM shares fell in 2007 on corruption investigations 

 AEM’s woes started in 2007 with its Chairman, another ED and its CFO were investigated by authorities for corruption and insider trading.

 The shares fell from S$0.25 to S$0.03 over the next four years with huges losses being incurred. The company was also placed on the watchlist and about to be delisted.

 In late 2011 and early 2012, a new shareholder emerged together with a new CEO replacing Transpac Capital.

 AEM managed to get off the watch list by making more than S$10mn pretax profits in 2010/2011.
 
Very compelling valuations

 AEM at $0.08 is now trading at 0.5 times price to book.

 Its gross/net cash is about S$43mn compared to its market capitalisation of S$35mn – so its trading below cash.

 Its main business is in the semi-conductor sector and it only has two customers.  An earnings recovery in the second half of 2013 should see the shares first rerate to its NAV $0.16.  Its next target would be earnings driven. 

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