KUALA LUMPUR: AllianceDBS Research is retaining its Hold call for Aeon Credit
Services Malaysia (ACSM) based on a challenging operating environment amidst weaker consumer sentiments.
It said on Friday as a provider of micro credit financing, ACSM’s growth is particularly vulnerable to the slowing consumer financing in Malaysia.
“Supporting our Hold recommendation is its decent dividend yield of 4%. ACSM’s loan growth should continue to be driven by Vehicle Easy Payment (VEP) segment (predominantly motorcycle and used car financing),” it said.
AllianceDBS Research said nevertheless, it expects growth to slow down on the back of weak consumer sentiments and softer consumer loan approvals and applications in the industry.
It forecasts ACSM’s loan growth to be at 18% (a slowdown from 27% in FY15) as softer consumer sentiment is expected to impede growth. In 2Q15, the consumer sentiment index dipped to a six-year low of 71.7, reflecting the weak outlook in Malaysia.
“We have a Hold recommendation for ACSM with a TP of RM12.80 based on 8.0 times PE. We do not expect valuations to rerate as softer consumer sentiments could dampen loan growth.
“Our loan growth assumption is premised on a moderation arising from softer consumer sentiments. Earnings could surprise on the upside if growth remains persistently strong,” AllianceDBS Research said.
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