AEM share price ready for Nasdaq listing?

It’s a major coup. On 24 August 2020, AEM Holdings appointed Samer Kabbani as Chief Technology Officer (CTO). Amid the global downturn due to the fallout from COVID-19 pandemic, many companies are downsizing and retrenching staff. AEM bucks the trend to continue its aggressive expansion. Investors reacted well to the news and gave AEM share price yet another short-lived lift.

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AEM share price

The appointment of the CTO has heightened investors’ hopes of a Nasdaq dual listing, which is widely deemed as the holy-grail for AEM share price. While it is not a requirement for companies seeking listing in Nasdaq to appoint a CTO, applicants are required to appoint a Chief Financial Officer (CFO). Thus, the appointment of Ms Leong Sook Han as AEM’s CFO on 9 June 2020 could be a move to comply with a potential Nasdaq listing.

The appointment of the CTO is an interesting one though as Mr Kabbani held senior positions in AEM’s overseas competitors – Advantest, Astronics Test Systems and Cohu. Furthermore, Mr Kabbani holds more than 20 patents in semiconductor processes. To be able to attract such high-calibre talent is a testament on the strength of AEM Holdings. No wonder AEM share price jumped from $4.06 on 21 August to $4.22 on 24 August.

The reason why AEM share price managed to leap frog from its Singapore peers – UMS, Frencken and Micro-Mechanics – is because the company holds a patent for one of the processes used in its blockbuster product, High Density Modular Test (HDMT). Based on my understanding, it is very rare in Singapore that a semiconductor test equipment company holds a patent, which was approved in US only in 2018. The patent provides AEM share price a leading edge over its peers.

In my opinion, the reason why a listing in Nasdaq is not on the cards for AEM yet is because its market capitalization has not reached USD1 billion. With less than USD1 billion in market capitalization, a listing in Nasdaq could subject AEM to hostile takeovers or poor trading liquidity. Currently, the market capitalization for AEM is $1.10 billion. To reach USD1 billion cap ($1.43 billion), AEM share price must hit $5.30. Given the current situation, there is still some headroom for AEM share price to rise before talks about Nasdaq listing would start.

But question now is: could AEM be a target of acquisition instead or is it really plotting for a Nasdaq dual listing? Mr Kabbani served as Executive Vice President at Advantest, which recently just acquired Essai, a semiconductor test equipment company, in January 2020. To be frank, I hope this is not the case as the takeover offer is unlikely to be very attractive, probably at most 20% to the last 6 months average AEM share price.

Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. I am vested in this counter (holding 10,000 AEM shares at $3.35), so my views on AEM share price may be biased.

AEM share price blows hot and cold

Many investors have been lamenting that AEM share price has been blowing hot and cold nowadays. When AEM share price increased 5% in a single day, investors popped the champagne in online forums. The moment AEM share price declined 5% on another day, investors punched the wall. As I am vested in this counter as well, I can certainly relate to their emotions.

Fundamentally, this is a long-term project and investors must have the right expectations for AEM share price. Rome is not built in one day, so you need to have the conviction, patience and vision for AEM share price. With the slew of acquisitions of companies focusing in R&D, coupled with the hiring of a CTO, it appears to me that Executive Chairman Loke Wai San is shaping AEM to be a R&D powerhouse.

One of the reasons why AEM is able to differentiate itself from UMS, Frencken and Micro-Mechanics is [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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Updated: August 31, 2020 — 1:04 pm

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