AEM Holdings carried an uncertain tone in its recent outlook statement but its subsequent share price fall wasn't just about that.

Date

Short sell volume

Value 
($)

1 Aug

5,906,000

4,495,024

31 July

2,522,000

2,607,494

Before 2Q results release

30 July

175,000

209,031

27 July

114,900

137,386

26 July

5,500

7,702

25 July

390,000

473,552

24 July

97,300

111,476

23 July

130,900

141,451

Source: SGX

Short-sellers were at play.

Those with no AEM stock to their name borrowed what they could (from brokers or CDP) and short-sold it.

In relatively rare cases, some simply and daringly did naked shorts.

 


SGX data (see table) shows a sharp jump in short-selling of AEM stock yesterday when the share price dived 24.6% to close at 75 cents.

This was on the back of a CIMB cut in the target price from $1.78 to just 69 cents based on 10X its forecast earnings per share.

(This new target price is way below the $1.00 that independent director Loh Kin Wah bought 100,000 shares at less than four weeks ago!)

The day before (31 July), short-selling became significant, contributing to the 16.8% dive of the stock which closed at 99 cents.

This was Day 1 following the release of AEM's 2Q results after the market closed on 30 July. 

What the company said that pointed to uncertainties ahead were:

♦ "We expect to enter a rolling upgrade phase starting 2019, which may introduce significant volatility into our business."

♦ "Our visibility into 2019 remains dim though we continue to work on our consumables business and have teams working on several new product initiatives."

Short-sellers, at some point, will have to buy back the stock -- which may drive the stock price up to some extent.

Those who have borrowed stock have the flexibility as to when they will buy back (but interest cost they incur will chalk up the longer they continue to hold borrowed stock).

Those who did naked shorts have no option but to allow SGX to buy in for them on Day T+3.

The SGX buying-in may exert some upward pressure on the stock price.

 
Note: The SGX short-sell data may not reflect the entire situation: 

1. Investors are required to mark a sell order in a security as a long sell or short sell. It's possible that some short-sells are not marked by the traders.

2. Data on short sale volume/value may not reflect the outstanding short position in those securities. Volume/value of short sales may include trades which have since been squared off by offsetting buy trades.

 
lokewaisan11.17aLoke Wai San, executive chairman of AEM. NextInsight file photo.A note on the fundamentals of AEM: It has to-date received sales orders worth S$235 million for delivery in FY2018.

Its profit guidance for FY2018 remains unchanged from the guidance provided on 22 January and 5 April 2018 -- ie, AEM expects at least S$255 million in revenue and S$42 million in operating profit before tax.

AEM, at its AGM in April 2018, guided how its business will take shape going forward, as follows: 

Future earnings growth through consumables, new programs and M&A

HDMT program expected to hit maturity in 2019. Earnings growth will be driven through HDMT consumables, new key account programs, and new business units from 2019 and beyond

2017

2018

2019

Core account
growth

Strong growth ramp for HDMT

HDMT replacement of old fleet

Recurring consumables/kits growth

Grow next-gen hybrid solutions

New account
growth

Continue market penetration in solar, industrial and smart-cards

Capture new semiconductor segments in System Level Test

New business

System Level Test solutions for non-semiconductor markets

Selective M&A activity

Source: AEM presentation at AGM


Comments  

0 #4 gracef 2018-08-03 23:02
It's a daily compilation.
See: http://www.sgx.com/wps/portal/sgxweb/home/marketinfo/marking_of_sell_orders
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0 #3 STT 2018-08-03 16:21
How is this daily SGX short sell list compiled? Does it show the short sell transactions entered into on that particular day? Or does it show the total outstanding short-sell trades at that moment in time? Thanks!
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0 #2 Notti 2018-08-02 19:26
AEM Holdings today bought back 100K shares @ $0.745. Let's see if this continues for at least a week/
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0 #1 Notti 2018-08-02 13:39
Shortists are becoming more naughty these days. But I accept these creatures as a part of the system. My question is, will AEM start to buy back shares? It is a nice way to signal to the market that it's good and pls do us a favor by punishing some shortists.
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