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Wednesday, February 17, 2016

Aemulus share price falls on earnings decline

PETALING JAYA: Test equipment manufacturer Aemulus Holdings Bhd (Aemulus) share price fell as the market reacted to the company’s decline in earnings.

Aemulus closed at 39.5 sen, traded on a volume of 23 million shares, down from yesterday’s close of 44 sen.

The company reported a core net loss of RM1.88mil for the first quarter ended Dec 31, 2015 on a sharp plunge in revenue, which slumped 69% to RM2.7mil.

Affin Hwang Capital said the plunge in earnings came as a surprise as the company’s flagship product, the Amoeba 4600, could easily fetch US$250,000 to US$300,000 each.

The bulk of the company’s revenue was contributed by non-core products, which command lower pricing and are experiencing a structural decline.

Apart from the plunge in revenue, the loss was weighed down by fixed administrative costs, which were reported at RM3.7mil, an increase of 7% quarter-on-quarter.

This was because Aemulus had recruited more engineers for the quarter, in order to ramp up its capabilities.

Most of the company’s key markets registered a significant decline in sales volume, led by Singapore, having declined from RM8mil in the previous quarter to RM53,000.

Sales to Singapore were predominantly to LSI, a subsidiary of Avago Technologies, for the Amoeba 4600.

“Given two consecutive quarters of earnings disappointment, we are concerned over earnings delivery going forward, especially amidst a sector cyclical slowdown.

“Despite our earnings downgrade by 36% and 44% for financial years 2016 and 2017 respectively, we are still projecting an earnings per share growth of 16.7% for 2016, which may be difficult to achieve in the event of another disappointing quarter,” said Affin Hwang Capital.

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