MAYBANK Kim Eng has initiated a "buy" on test handling machine supplier AEM Holdings, as it predicts that a recovery in orders and demand from new customers will drive earnings higher in 2020. The brokerage's target price is S$1.21, based on 2.9 times the average 2019-2020 price-to-book, 10.6 per cent cost of equity and long-term growth of 2 per cent. As at 11.11 am, AEM's counter was trading up 5.53 per cent at S$0.955. Analyst Lai Gene Lih believes that while AEM's HDMT test handler (TH) deliveries are expected to be tempered by slower operational fleet replacement this year, orders could pick up in 2020 as AEM's core customer - "a US$215 billion market-cap chipmaker" - completes its capacity expansion in Israel. Furthermore, the customer is engaging AEM for a second project, involving a next-generation hybrid solutions product, said Mr Lai.