AEM Holdings Ltd’s Shares Have Ballooned 19% So Far: What’s Behind the Frenzy?

AEM Holdings Ltd (SGX: AWX) is involved in the designing and manufacturing of equipment and precision components for the semiconductor, solar and smart card industries.

As of the time of writing (12:46 pm), its shares are going at S$3.03 apiece, up 18.8% from Friday’s close of S$2.55. What could have caused the euphoria?

Early yesterday morning, the firm announced that it is upgrading its profit guidance for the first nine months and for the full year ending 31 December 2017.

The company expects its operating pre-tax profit to be between S$25 million and S$27 million for the nine months, up from the previous guidance of S$17.5 million given during its first-quarter results announcement in April.

For the full year of 2017, operating pre-tax profit is projected be at least S$32 million, higher than the S$24 million estimate shared during its second-quarter results announcement in August.

For context, the firm made S$4.9 million in profit before tax for the nine months of 2016 while for the full year, it raked in S$6.1 million.

AEM added that the “positive update in our guidance is mainly attributed to higher sales, better profit margin, and better operational efficiency as a result of strong customer demand coupled with benefits from the Company’s ongoing efforts at upgrading operational productivity”.

The road ahead for semiconductor stocks like AEM Holdings looks bright. For the whole of 2017 and 2018, the World Semiconductor Trade Statistics, the world’s leader in global semiconductor market statistics, forecasts a growth of 11.5% and 2.7% respectively in the semiconductor market.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.