The Fundamental Story

Aemulus recorded a loss of RM4.651 million in FPE2020. As a result, its share price consistently sidelined below 0.300 for the majority of 2019 and half of 2020. More importantly, R&D expenses have increased approximately RM0.697 million or 24% as compared to FPE2019, in tandem with the company's continued investment in R&D.

Now, its important to note that the fall in revenue of 43% or RM9.18 million as compared to FPE2019 was attributable to the soft demand for test system from the enterprise storage market segment as well as the impact of COVID- 19 pandemic and implementation of travel and other restrictions locally and globally. Make no mistake, at this point of time, the company was not performing well both financially and in terms of technological advancement.

In fact, the company’s sales had flagged for the longest time because it had designed a generic tester, the AMB 5600, which had been all but impossible to move.

The Wind of Change

Soon after, the company made a radical decision to modify its usual tester into a specialised tester in an attempt to breach into a niche market. The company received immediate orders for this product, which was launched during the MCO period in both Taiwan and China.

Not withstanding the above, Aemulus being one of the few companies in Asia that own the intellectual properties to design and develop RF testers had entered a Joint-Venture with China’s Tangren Microtelligence Co Ltd to monetize the intellectual property rights of its radio frequency tester. With an investment of RM6.67 million into the JV, Aemulus owned a 40%-stake in the JV.

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The Funds Flow Analysis of Aemulus in July

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The Funds Flow Analysis of Aemulus in August

Zooming into the chart to see a short term perspective, we can clearly see that Aemulus is on a rocket ship upwards. Each long white candle yields a profit taking candle, which indicates healthy correction and the flushing out of what we call the 'foolish herd' in funds flow methodology. This herd signifies those that are happy with their 5-10 bids profit and hence are taking profits early, but based on the funds flow methodology, there was nothing stopping Aemulus at this stage in time. 

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Observe the symmetrical triangle breakout drawn above. The breakout is a two-month long consolidation after a sharp rise in Aemulus' price (refer to above funds flow analysis) which centred around of 0.650. Now, carefully observe the falling volume accumulation as shown above, whereby in funds flow theory, we describe this as a sign of impuslive re-accumulation by smart monies. The subsequent drop in volume during falling candles successfully washed out the foolish retailers who believed that the show was over for Aemulus. The high spikes in each round drawn above signifies a rush to buy back by all three forces of bullish smart monies. 

To illustrate an example, refer to the chart below, whereby the holy-trinity of accumulation has successfully completed its funds flow methodology principle:

Aemulus will see new highs like never before.

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