RCE Capital dividend outlook promising after a strong start to FY24

PETALING JAYA: RCE Capital Bhd’s prospects appear stable after a strong start to its financial year ending March 31, 2024 (FY24), confirming a robust dividend outlook.

The management services provider, whose net profit rose to RM36.9mil in the first quarter of FY24 (1Q24) from RM32.2mil in the previous corresponding period, surpassed expectations and set another record, Maybank Investment Bank (Maybank IB) Research said.

“It is also good to know that non-performing financing (NPF) ratios continue to ease after surging last year.

“This gives us comfort that RCE’s high forecast dividend yields of more than 6% per annum will continue, going forward,” the brokerage said in its report yesterday.

Maybank IB kept its “buy” call on RCE, with a target price of RM2.38 a share.

It said the company’s gross NPF ratio continued to improve by easing to 3.7%, or down 22 basis points (bps), year-on-year (y-o-y) and seven bps quarter-on-quarter (q-o-q).

“Last year, gross NPF ratios and allowance for impairment loss on receivables spiked due to more civil servants in the academic and healthcare sectors resigning,” it added.

Maybank IB noted that RCE’s 1Q24 net profit came in at RM36.9mil, which was up 14% y-o-y and 6% q-o-q, marginally above its expectations.

The outperformance was due to interest and profit expense of RM24.9mil (up 23% y-o-y, but down 2% q-o-q), coming in at only 23% of Maybank IB’s FY24 estimate despite financing liabilities and debt securities growing 5% q-o-q.

During the quarter in review, RCE’s earnings per share stood at 5.03 sen versus 4.40 sen in 1Q23, as revenue grew to RM83.97mil from RM77.66mil a year earlier.

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