Quick take: Aeon Credit top loser on Bursa, falls 2.8%

KUALA LUMPUR: AEON Credit Service (M) Bhd is the top loser on Bursa Malaysia in early trade Wednesday despite posting firmer profit for its second quarter ended Aug 31.

The counter fell 2.83%, or 30 sen to RM10.30. It is currently trading at a PE ratio of 9.86 times.

Aeon Credit has posted a 5.46% year-on-year (y-o-y) jump in its net profit to RM51.81mil for its second quarter ended Aug 31. Its revenue came in 10% lower y-o-y at RM363.97mil.

On a half-year financial review basis, Aeon Credit’s net profit declined 41.61% to RM78.09mil mainly due to the disruptions from the movement control order on the company’s operations.

Revenue for the first six months dropped 3.73% y-o-y to RM753.85mil from RM783.03mil in the same period last year.

MIDF Research said Aeon Credit’s 1HFY21net profit was a shade below the house’s full year forecast at 44.6%.However, it was well below consensus at 32.9%.

“Given that its earnings were only slightly below our expectation, we are maintaining our forecast for now,” it said.

The research house believed that provisions will continue to weigh on Aeon Credit’s earnings especially post loan deferment period. This will also put a dampener to revenue as well.

Furthermore, lower current collection ratio suggests that delinquencies might be trickling in.

“However, we believe that asset quality will likely remain stable. All-in, we maintain our neutral call with revised a target price of RM9.90 (fromRM9.45) as we roll over our valuation to FY22. We peg our forecast of Aeon Credit's FY22 BVPS of RM7.60 to PBV of 1.3 times,” MIDF said.

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