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MAYBANK KIM ENG |
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AEM Holdings Ltd FY23F net loss expected
■ AEM announced on 14 Jan 2024 that a stock-take had uncovered overstated inventories due to human error. ■ We estimate that AEM will need to reflect S$25.1m higher cost of goods sold (COGS) for FY23F, leading to a net loss of S$12.2m for the financial year. ■ We maintain our Add call which is premised on AEM’s earnings growth potential (+57% yoy) in FY25F based on our net profit expectations.
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Regional Plantations MPOB’s 2023 report card and 2024 outlook
A more normalized 2023 performance 2023 CPO ASP of MYR3,810/t was 25% below 2022’s unsustainably high CPO ASP. This led to a 24% YoY fall in MY’s total export revenue in 2023 to MYR105b. MY’s oil palm sector remains saddled with a few ongoing issues such as low yield, ageing trees, declining planted area, and high unit cost. Disciplined replanting with higher yielding seeds, mechanization and more consolidation (ie M&A) will remain the industry’s key focus in the years to come. Our BUYs are FR, GENP, BAL, SOP & TAH.
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MAYBANK KIM ENG |
CGS CIMB |
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AEM Holdings (AEM SP) Inventory shortfall; D/G to HOLD
Headwinds from data error and slow recovery AEM said it discovered a shortfall in inventory which is estimated to be around 5-7% lower than earlier calculated at its Sept 2023 inventory close of SGD358.6m. This was due to a human data entry error in transactions through its ERP system during the migration of production. We expect an impairment of about SGD18-25m in its FY23E numbers due to be reported in late Feb. We are also pricing in a weaker recovery, most of which will only come in 4Q24E. We cut our FY23/24 PATMI forecasts by -232% and - 34%, respectively. While we believe the worst is over for AEM, we now see a substantial recovery only in FY25E. We are also disappointed by the internal processes which led to such a basic error. As such, we downgrade to HOLD with a lower TP of SGD3.26 (from SGD3.76) based on a lower blended 13.0x FY24/25E P/E from 13.5x
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Maxis Berhad Moving towards clarity but valuations to drag
■ Reiterate Hold on Maxis with a revised target price of RM4.00 (RM4.26 previously) on reduced estimates and target multiple despite rolling forward. ■ 5G clarity is likely in 1H2024F; our assumption is Maxis will build the second of the two 5G networks. ■ At 10.2x FY24F EV/EBITDA and 23x P/E, valuations remain the key drag for Maxis, in our view. 4.7% FY24F dividend yield provides some support.
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| DBS VICKERS | |
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SHENG SIONG GROUP
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