Aeon Credit service still going strong
KUCHING: Aeon Credit Service Malaysia Bhd’s ( Aeon Credit) performance is still going strong as it continues to defy consensus expectations with a reported FY17 net profit of RM265 million.
The net profit was a 17.5 per cent increase year over year (y-o-y) and a 19.4 per cent increase quarter of quarter (q-o-q).
According to the team at MIDF Amanah Investment Bank Bhd ( MIDF Research), the steady growth in net profit was reflective of an increase in the group’s top line, other operating income numbers and improvement in asset quality.
“As such it came in 112 and 107 per cent above ours and consensus’ respective full year FY17 estimates,” the research arm explained.
Not all analysts were surprised by the group’s FY17 results as Kenanga Research, the research arm of Kenanga Investment Bank Bhd noted that the group’s FY17 core net profit of RM251.3 million had made up 104 per cent of its full-year estimates.
“As expected form this result, a final single tier dividend per share (DPS) of 32.5 sen was declared, bringing year to date (YTD) net DPS to 63.0 sen which came close to our FY17E DPS of 64.0 sen,” Kenanga Research added.
Upon closer look at Aeon Credit’s performance, the group’s top line increase was derived from net income increasing by 14 per cent due to higher net financing receivable from its Automobile and Personal Financing segments.
Growth of operating income was due to stronger recovery in bad debts, better commission income from sale of insurance products and the group’s ‘Aeon Big’ loyalty programme’s processing fees.
Meanwhile, improvement in asset quality was due to the group’s aggressive collection effort that has improved the rate of its nonperforming loans by 0.2 points y-o-y at 2.28 per cent.
“Aeon Credit will continue to improve the profitability via various initiatives such as its value chain transformation project and digitisation of branch operations,” guided MIDF Research.
Kenanga Research raised its TP on the stock to RM18.20 per share in response to Aeon Credit’s attractive loan growth prospects.