KUALA LUMPUR: Aemulus Holdings Bhd (Aemulus) core net profit of RM1.7mil in the fourth quarter of financial year 2015 (4QFY15) fell short of Affin Hwang Capital Research’s full year estimates.
An electronic test equiment service provider, Aemulus’ FY15 core net profit was at RM8.4mil, which accounted to only 76% of the full year estimates.
The research house said on Monday that FY15 revenue rose 39.8% year-on-year to RM32.6mil, underpinned by growth from its new data storage testers, Amoeba 4600, which was introduced in early 3QFY15.
Affin Hwang estimated that Amoeba 4600 contributed more than 40% of total revenue this year and its full year impact was likely to be felt in FY16.
It adds that while the Amoeba 4600 continued to see strong growth, the older Amoeba 4200 and 7600 products were experiencing a structural decline in sales.
Aemulus’ regional expansion plan is also benefiting the company, as reflected by the growth of theoverseas revenue contributions from Singapore at 101.7% y-o-y and USA at 76.0% y-o-y.
However, revenue from China has moderated by a decline of 18.1% y-o-y due to the sectoral slowdown.
China accounts for 13.3% of revenue.
The group’s FY15 operating margin fell sharply to 26.8%, down by 9.7 percentage points y-o-y.
This was attributed to the weak 4Q, which was partially due to seasonal reasons, as orders normally peak in 3Q, April until June.
“We also understand that the operating margin has come under pressure as Aemulus seeks to penetrate new markets with lower price points and to create better brand awareness via additional marketing activities.
“This is evident in the increase in the administrative expenses, which was up 52% y-o-y to RM11.8m,” the research house said in a report today.
In view of the sharp price appreciation since Aemulus’ listing in September 2015, the sombre set of results and its relatively fair valuations at 2016 earnings per share of 16 times, Affin Hwang downgrades the stock from Buy to Hold.
“Our target price is nevertheless raised to RM0.56 from RM0.37, pegging it to 15 times earnings per share, which was previously 10 times,” said Affin Hwang.
Downside risks include slower products take-up rate, product obsolescence and sectoral slowdown in semiconductor industry, while upside risk include new products and target markets, which would translate to earning upgrades.
