Kenanga Research also said AEON Credit remains highly capable of priming up its financing portfolio.
PETALING JAYA: Aeon Credit Service (M) Bhd
’s mix of B40:M40 customers at a 65:35 ratio may pose some challenges to the group beyond the first half of financial year 2026 (1H26), weighed down by lower economic prospects and inflation spurred by developments in trade tariffs.
Kenanga Research in a note to clients said: “While the group is growing its loans well above its 10% target, we opine it may slow down on this effort to minimise its overall risk exposure and protect credit quality.”
Higher provisions led to a return on equity of 10.5%, falling behind the full-year target of 12%, it added.
AEON Credit’s latest 1H26 earnings of RM149.8mil made up only 42% of Kenanga Research’s full-year forecast and 41% of consensus full-year estimates.
“We deem this to be broadly within expectation on the back of anticipated stronger 2H26 when bad debt recoveries pick up,” the brokerage firm added.
That said, the group’s dividend prospects remain healthy from the declared interim dividend of 13 sen.
Kenanga Research also said AEON Credit remains highly capable of priming up its financing portfolio, albeit growth in its books continuing to keep impairment charges hefty, potentially limiting immediate earnings growth
Meanwhile, the brokerage firm said AEON Bank (M) Bhd may see narrowing losses assuming its revenue generating products pick up, with new Islamic working capital financing products slated to be launched by this November.
Kenanga Research kept its forecasts unchanged and maintained an “outperform” call on the stock with a target price of RM6.25 per share.
Investors may also be watchful of further potential rises in credit cost ahead of worsening macro conditions.
That said, certain investors may find its post-revision dividend yields of 5% to 6% palatable (at a 40% payout in line with FY25), and may accumulate on weakness.
In its latest report, CIMB Securities Research said AEON Credit’s 1H26 net profit of RM149.8mil fell short of both its expectations and consensus at 41.3% and 41% of full-year FY26 forecasts, respectively. The key variance was due to higher impairment provisions.
A dividend per share of 13 sen was declared, down 8.8% year-on-year, reflecting the lower net profit.
“We are maintaining our FY26 to FY28 forecasts, pending the group’s upcoming analyst briefing,” the research house said while maintaining a “hold” call on the stock with a target price of RM5.70 per share.
It also deemed it as fair, given the limited near-term catalysts for re-rating considering the continued losses from AEON Bank and rising impairments.
The key upside risks include higher-than-expected financing receivables growth, and lower funding costs.
Meanwhile, RHB Research said AEON Credit’s 1H26 results fell short of expectations once again due to higher-than-expected impairment allowances.
However, collection ratios demonstrated an improvement in August 2025. Should this hold up, it would be positive for credit costs in 2H26, it added.
“For now, the group’s earnings forecasts are maintained, pending the group’s results briefing. Given the results miss, risks to our forecasts are tilted towards the downside,” RHB Research noted.
The research house maintained a “buy” call on the stock with an unchanged target price of RM7.60 per share.
