AEM Holdings went from subpar to stellar in less than a decade. In 2011, it was struggling to get out of the SGX Watchlist; in Au­gust 2021, the test and handling provider for the semiconductor industry is poised to welcome Temasek Holdings as its largest shareholder following a $103.1 mil­lion placement at $3.8477 each.

Such a feat has not many parallels – certainly not in the past two decades of the manufacturing scene covered by The Edge Singapore.

AEM was trading at just seven cents in September 2011, in the wake of corruption charges levelled against its former man­agement.

All its customers fled, but one — which the company declines to name, but is under­stood to be semiconductor giant Intel Corp.

Enter the managing partner of investment firm Novo Tellus Capital Partners, Loke Wai San. In an interview with The Edge Singapore (Issue 648, Oct 20, 2014), Loke said: “When I looked at the company as an outsider, I thought, ‘Why didn’t the big customer leave?’ That gave us [the] conviction that there was something ‘very core’.” He compared it to an analogy: people would not abandon their tailor when their suit is half-made.

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He looked through the shareholders’ roster and made an offer to buy over the block of shares held by another fund. Then, as AEM’s chairman, Loke spent the next few years turning the company around. Decisive moves, such as selling off a loss-making division for a song, were made.

By the second quarter of 2015, the com­pany had turned profitable.

Even so, Loke husbanded the company’s resources, channelling the earnings into R&D and other capital equipment investment, in­stead of paying the money out as dividends. In 2016, AEM invested in a new generation of test handler machines to drive growth. This paid off in 2017, when it saw a massive 17-fold y-o-y increase in earnings to $4.1 million in its 1QFY2017 results.

The machines, developed in conjunction with AEM’s key customer, are able to simulta­neously test various types of computer chips. Owing to the highly customised nature of the new equipment, it was likely that AEM could secure recurring orders from this customer.

The next time Loke appeared in The Edge Singapore (Issue 723, April 11, 2016), the market had started recognising AEM’s value. Loke noted then that there were very few companies in the US that manufacture modular handlers. “We are the only company engaged with our customer in the test handler space. This is a customised programme that you cannot buy off the shelf,” he said.

Since then, the company has gone from strength to strength. With ever better earn­ings each year, its share price hit a record of $4.72 this February, although it has since eased off somewhat.

One might ask, how did Loke do it? In a 2020 interview for AEM’s win at the year’s Billion Dollar Club awards, Loke attributed the turnaround to what he called the “AEM DNA” — identifying attributes and values that the company has to offer for its customers.

He added that being a partner is not simply about presentations, but about “keeping a promise, and delivering and understanding how to be a partner for your customer”.

In 2018, Novo Tellus exited its invest­ment in AEM, but Loke is still staying on as non-executive chairman.

With a series of acquisitions made over the last couple of years, including CEI, AEM clearly has a bigger appetite to do more. And thanks to its bright prospects, riding on the growth of the semiconductor market leader, AEM has attracted a strong following among investors.

In his most recent interview with The Edge Singapore earlier this year (Issue 981, April 26, 2021), Loke reveals that it was very nearly not this way. Back in 2011, after he took control of the company, he did not expect AEM to remain public at that time. “But we couldn’t get anyone excited about the company. So it remained public,” he recalled.