AEONCR - Positive momentum

Stock Name: AEONCR
Company Name: AEON CREDIT SERVICE (M) BHD

Research House: HWANGDBS

Price Call: HOLD

Target Price: 9.20

AEON Credit Service; Hold; RM8.74
Price Target: RM9.20 (Prev: RM7.00); ACSM MK
FY12 profit better than expected; declared 16.8 sen net DPS; FY12 total DPS is 30 sen. Robust loan growth driven by personal financing and credit cards. Maintain Hold, TP raised to RM9.20 (pegged to 8x CY13  EPS), offering 9% total return (including 4% net dividend yield).

Source: HwangDBS Research - 20 April 2012

AEON Credit (ACSM MK, Maintain BUY, FV RM9.98, Last Close RM8.74)

Stock Name: AEONCR
Company Name: AEON CREDIT SERVICE (M) BHD

Research House: OSK

Price Call: BUY

Target Price: 9.98

AEON Credit's (ACSM) FY12 earnings beat consensus and ourfull-year forecasts by 17.5% and 10.1% respectively. Revenue and net profitsurged 27.7% and 50.7% y-o-y on better showing in  all its businesssegments.  Asset quality was  largely preserved although the CAR declinedto 21.8%  from 24.0% in the previous year'but still well above the required 16.0% - while NPLs dipped 14 bps to 1.80%. The company has proposed a 16.8 sensingle tier final dividend, bringing the FY12 dividends to 30.0 sen. MaintainBUY, with a higher fair value of RM9.98, pegged to 10x FY13 EPS vs  9x previously,  on ACSM's consistent growth and bright prospects ahead.

Better than expected.ACSM's FY12 revenue and net profit surged 27.7% and 50.7% y-o-y  respectively, largely due to: i) strongerrevenue growth in its credit card segment (+68.7% y-o-y), ii) stable revenuegrowth from general easy payment (+12.6% y-o-y) and vehicle easy paymentsegment (+14.2% y-o-y), iii) a solid 83.6% y-o-y growth in revenue from itspersonal financing business, and iv) stronger other income (+44.5% yo-y)spurred by transaction fee income relating to a higher financing transactionvolume (+40.8% y-o-y). Financing receivables climbed 34.5% y-o-y supported bystrong growth in the personal financing (+102.9% y-o-y) and credit card (+52.2%y-o-y) segments, while total financing receivables stood at RM1.52bn vsRM1.13bn in the preceding year.

Solid sequentialperformance. On a q-o-q comparison, ACSM's 4QFY12 revenue and earnings grew5.0% and 9.7% respectively, underpinned by a robust 19.2% q-o-q growth in personalfinancing and 11.7% q-o-q growth in other income. Revenue from the credit cardsegment, however, grew at a slower 1.0% q-o-q due to the lower number of creditcards issued in tandem with new Bank Negara's new regulations on credit cards.

Asset quality intact.NPL ratio edged down by 14 bps to 1.80% compared with 1.94% in the previousquarter,  slightly above below the  1.9% industry average. However, the company's  capital adequacy ratio dropped to 21.8% from24.0% in the previous year, although still well above the requirement for16.0%.

Maintain BUY.  We are taking the opportunity to bump up ourFY13 revenue and earnings forecasts by 14.5% and 24.5% respectively, largelydue to robust growth in its consumer durable financing and personal loanbusiness. This also raises our fair value from RM7.20 to RM9.98, pegged to  a  10xFY13 EPS  vs  9x previously. We  deem the higher valuations  vis-''-vis current levels justified, as the scope for further domestic market share gains is likely due to themanagement's focused strategies, marketing and branding efforts, and thestock's attractive dividend yield of 4.2% and 5.4% for FY13 and FY14respectively.

Source: OSK188

Aeon Credit gains on firm 3Q earnings

Stock Name: AEONCR
Company Name: AEON CREDIT SERVICE (M) BHD

Research House: OSK

Price Call: BUY

Target Price: 7.20

Larger Smaller Reset KUALA LUMPUR (Dec 21): Aeon Credit Services (M) Bhd shares advanced on Wednesday after its net profit for the third quarter ended Nov 20, 2011 rose 57.4% to RM25.25 million from RM16.04 million a year earlier, due mainly to growth in revenue.

At 9.40am, Aeon Credit was up three sen to RM6.60 with 34,500 shares traded.

The company said on Tuesday that its revenue for the quarter was up 31.7% to RM89.81 million from RM68.18 million.

Earnings per share for the quarter was 21.05 sen compared to 13.37 sen in 2010, while net assets per share was RM2.53.

For the nine months ended Nov 20, Aeon Credit's net profit increased to RM67.89 million from RM44.03 million in 2010, while revenue jumped to RM249.99 million from RM195.88 million.

Reviewing its performance, Aeon Credit said the increase in revenue was due mainly to growth in business and receivabled based on increased financing transaction volume as a result of marketing and promotion activities during the festive periods.

OSK Research in a note Dec 21 said Aeon Credit's 9MFY12 earnings were above consensus and its full-year forecasts.

Revenue and net profit expanded by 27.6% and 54.3% year-on-year due to better performance from personal financing, credit card and other income in conjunction with Hari Raya festival, it sid.

'However, credit card base growth slowed down due to BNM regulation on credit card which will take effect next year. ''NPL trended up to 1.93% which is still well below the industry average. CAR stood at 20.8%.

'Maintain Buy with a higher fair value of RM7.20 as we roll forward our valuation to FY13 EPS pegged to 2-year PE band of 9 times,' it said.

Earnings lift for Aeon Credit Service

Stock Name: AEONCR
Company Name: AEON CREDIT SERVICE (M) BHD

Research House: HWANGDBS

Price Call: BUY

Target Price: 7.00

AEON Credit Service (M) Bhd
(Dec 14, RM 6.23)

Maintain buy with revised target price of RM7 from RM5.70: Our net profit forecasts have been raised after factoring in lower operating expenses (mainly from provision of doubtful debts), which more than offset the smaller increase in revenue contributions from the personal financing segment (on lower blended finance charges) and credit card business (due to lower outstanding credit balance).

We are keeping our FY12F to FY14F loan financing assumptions at RM1.5 billion (+27.8% year-on-year [y-o-y]), RM1.7 billion (+12.4% y-o-y) and RM2 billion (+16.4% y-o-y) as demand for microfinancing products is expected to remain steady despite the uncertain economic outlook.

During the 2008/09 global financial crisis, the group posted loan growth of 8.4% (and non performing loans of 1.8%) in FY10 ended February.

Results for 3QFY12, to be released this Tuesday, should come in stronger vis-''-vis 3QFY11 net profit of RM16 million and 2QFY12's RM23.5 million. The most recent quarter could have benefited from spillover festive spending for Hari Raya Aidilfitri (which fell at end-August).

Our revised net profit projections imply annual growth rates of 40.5% (to RM89 million) in FY12 and 22% (to RM108.6 million) in FY13.

This is based on a higher CY12 target price earnings ratio of eight times (seven times previously) after considering the expanding size of ACSM (from RM300 million to RM751 million in market cap as net profit posted a five-year compound annual growth rate of 35.2%) since its listing in 2007.

Our new target price offers a potential upside of 17%, including FY13F net dividend yield of 5%. Maintain 'buy'. ' Hwang DBS Vickers Research, Dec 14

AEON Credit Service shows sustainable growth momentum

Stock Name: AEONCR
Company Name: AEON CREDIT SERVICE (M) BHD

Research House: HWANGDBS

Price Call: BUY

Target Price: 5.70

AEON Credit Service (M) Bhd
(Sept 22, RM 4.70)
Upgrade to buy with target price raised to RM5.70 (based on CY12 price-earnings ratio of seven times): AEON Credit's 2QFY12 net profit surged 59% year-on-year (y-o-y) to RM23.5 million, representing 52% of our initial full-year forecast of RM82.5 million. This was on the back of 28% growth in revenue to RM83 million, mainly driven by credit card (CC: +74% to RM15.2 million) and personal financing (PF: +85% to RM10.3 million).

General easy payment (GEP) and motorcycle easy payment (MEP) remain the breadwinners, contributing 69% to group revenue. Earnings before interest and tax (Ebit) margin improved eight percentage points y-o-y and five pps quarter-on-quarter (q-o-q) to 50.6% (against 2QFY11: 42.5%; 1QFY12: 45.5%) lifted by better operating efficiencies. AEON Credit declared a first interim net dividend per share of 13.2 sen (54% of our full-year expectation of 24.3 sen), which implies a 2.9% yield.

We have tweaked our FY12F to FY14F earnings up by 1% to 7% to factor in stronger loan growth. AEON Credit's 1HFY12 new loans grew 60% y-o-y to RM805 million against our previous assumption of +9.4% y-o-y. Stronger lending momentum was seen in three key segments: MEP (+41.2% y-o-y to RM186 million), CC (+93% y-o-y to RM363 million) and PF (+132% y-o-y to RM83 million). However, given the growing uncertainties on global credit issues, in our revised forecasts, we have factored in 28% y-o-y growth in new loans to RM1.5 billion in FY12F as we expect loan growth to be slower in 2HFY12.

AEON Credit is a defensive play backed by its 5% to 6% net dividend yield in FY12F/FY13F with undemanding price-earnings ratio of less than seven times and low foreign shareholding (about 10%) which should help to limit share price downside risk. We upgrade AEON Credit to 'buy' (from 'hold') with a higher target price of RM5.70 based on seven times CY12 (from FY12) earnings per share as we roll over our valuation window. We like AEON Credit for its niche in micro credit consumer financing, riding on rising domestic credit demand. ' Hwang DBS Vickers Research, Sept 22


This article appeared in The Edge Financial Daily, September 23, 2011.

OSK Research maintains Buy on AEON Credit

Stock Name: AEONCR
Company Name: AEON CREDIT SERVICE (M) BHD

Research House: OSK

Price Call: BUY

Target Price: 5.95

KUALA LUMPUR: OSK Research is maintaining its Buy call on AEON Credit at RM4.55 with fair value at RM5.95.

It said on Thursday, Sept 22 that AEON Credit's 1HFY12 earnings were above consensus and its full-year forecasts, representing 54.8% and 59.1% of consensus and its full-year forecasts.

Revenue and net profit increased by 25.5% and 52.1% respectively y-o-y, mainly underpinned by higher growth in personal financing (+81%), credit card (+65%) and easy payment schemes (+12.9%) in conjunction with an early Hari Raya festival.

'Asset quality remained strong, with non-performing loans (MPL) improving to 1.64% (1Q12: 1.77%) and CAR stood at 22.2%. A 13.2 sen interim single tier dividend was proposed this quarter. Maintain BUY call on AEON Credit, with a revised fair value of RM5.95,' it said.

AEONCR - Smooth sailing for AEON Credit

Stock Name: AEONCR
Company Name: AEON CREDIT SERVICE (M) BHD
Research House: OSK

AEON Credit Services (M) Bhd
(June 15, RM5.16)
Maintain buy at RM4.90 with fair value of RM5.40: 1QFY11 revenue and net profit rose 22.4% and 45.5% year-on-year (y-o-y), mainly bolstered by: i) strong revenue growth in personal financing, which soared 78% y-o-y due to relentless telemarketing efforts; ii) a 57% y-o-y jump in other income as bad debts recovery surged 45%; and iii) higher revenue from the credit card segment (+55%) owing to the company's aggressive cardholder recruitment efforts and enhancement in card benefits.

Revenue at AEON Credit's core business of easy payment schemes, which contributed 66.6% of the total revenue, rose 11.3% y-o-y while that from general easy payment (GEP) and motorcycle easy payment (MEP) went up by 13% and 10% respectively. This was in tandem with growth in the company's financing receivables, which were higher by 7.6% year-to-date (YTD). Meanwhile, the transaction and financing volume for 1Q of RM373.2 million was 63% higher y-o-y.
Financing receivables (+7.6%) grew healthily across all segments while receivables from the credit card segment jumped 18.8% YTD from RM245 million to RM291 million.

In the personal financing segment, receivables grew 16.8% YTD to RM118 million versus RM101 million previously while general and motor easy payment receivables ticked up 1.2% and 4.1% respectively.

Non-performing loans eased to 1.77% from 1.83% in FY11 on better risk and portfolio management control while its CAR stood at 23.8% (FY11: 24%).

Going forward, the company plans to expand the range of products under its easy payment and personal financing schemes. It also aims to extend financing to small businesses for the purchase of office assets and equipment.

We believe AEON Credit is on track to deliver decent results by diversifying its revenue stream. We maintain our 'buy' call on AEON Credit, with a fair value of RM5.40, pegged to its historical two-year PE band of nine times based on FY12 EPS. ' OSK Research, June 15


This article appeared in The Edge Financial Daily, June 16, 2011.

AEONCR - HDBSVR raises Aeon Credit earnings by 13%, TP RM4.80

Stock Name: AEONCR
Company Name: AEON CREDIT SERVICE (M) BHD
Research House: HWANGDBS

KUALA LUMPUR: Hwang DBS Vickers Research (HDBSVR) raised FY12-FY13F earnings for Aeon Credit by 13% and 11% respectively following the strong 1Q results.

It said on Wednesday, June 15 that it had factored higher revenue contribution from credit cards (as we assume higher percentage of outstanding credit cards purchases of 70%-75% from 45%-46%) and stronger fee income.

'Accordingly, our TP is raised to RM4.80, based on 7 times FY12 EPS. Maintain Hold,' it said.

HDBSVR said 1QFY12 net profit of RM19.2 million (+45% y-o-y) comprised 26% of its initial full-year forecast of RM72.7 million; above expectations. This was lifted by higher interest income recognized and other fee income and charges as total revenue grew 22.5% to RM77.1 million.

Key revenue drivers were personal financing and credit card segments which jumped 78% (to RM8.8m) and 55% (to RM13.1m), respectively. General easy payment (GEP) and motorcycle easy payment (MEP) schemes remain the breadwinners contributing 72% in total to group revenue.

'With greater economies of scale, EBIT margin increased 5.2 percentage points to 45.5% (vs 1QFY11: 40.3%). Sequentially, net profit declined slightly by 1% despite higher revenue of 5% (considering 1Q is typically a weak quarter).

'This was also dragged down by higher operating expenses (+8.8%) such as promotions, personnel and administration expenses. Meanwhile, 1QFY12 average funding cost and NPL ratio remained stable at 4.46% (vs 1QFY11: 4.41%) and 1.77% (vs 1QFY11: 1.80%) while CAR ratios slipped to 23.7% (vs 1QFY11: 25.4%), respectively,' it said.

AEONCR - Growth slowing down at Aeon Credit Service

Stock Name: AEONCR
Company Name: AEON CREDIT SERVICE (M) BHD
Research House: HWANGDBS

Aeon Credit Service (M) Bhd
(March 9, RM3.97)
Downgrade to hold at RM3.92 with target price reduced to RM4.20 (from RM4.60): We expect financing volumes for ACSM's two key business segments ' motorcycle easy payment (MEP) and general easy payment (GEP) ' to show healthy single-digit improvement quarter-on-quarter (q-o-q), while personal financing and credit card operations could have exceeded internal targets in 4QFY11. All in, ACSM should meet our loan growth projection and hit RM1 billion in FY11F with unearned interest income underpinning earnings visibility in FY12F/13F.

Rising interest rates normally mean higher interest cost for lenders like ACSM. But the net impact on net interest margin (NIM) may be lessened by its funding mix (64% fixed and 36% floating rate) and ability to adjust lending rates. Our sensitivity analysis shows that every 1% increase in average funding cost would reduce ACSM's FY12F/13F net profit by 1.5% to 1.7%.

Taking into account FY11 growth expectations, we trim our loan growth assumption for GEP and MEP to an average of 11% for FY12F/13F. In addition, we raise interest cost for floating loans by 50 basis points to reflect DBS Bank's expectation of overnight policy rate hikes in 2011. As a result, FY12F/13F earnings are cut by 6% to 7%.

Since its listing in December 2007, group net profit has been expanding at 41% compound annual growth rate (CAGR). But growth will start to slow because of a larger earnings base (FY10/FY13F CAGR of 14%). This has prompted us to change our valuation metric from a price-earning to growth ratio to price-earnings (PER). Applying a three-year historical average PER of seven times on FY12F earnings per share, we derive a lower target price of RM4.20 (from RM4.60). Downside risk is limited by its undemanding PER valuation and decent FY12F net dividend yield of 5.4%. Downgrade to 'hold' as the stock ' which has risen 5.1% year-to-date ' offers only 13% total potential return (including dividends). ' HwangDBS Vickers Research, March 9


This article appeared in The Edge Financial Daily, March 10, 2011.

AEONCR - HDBSVR lowers AEON Credit Service to Hold, cuts TP to RM4.20

Stock Name: AEONCR
Company Name: AEON CREDIT SERVICE (M) BHD
Research House: HWANGDBS

KUALA LUMPUR: Hwang DBS Vickers Research has downgraded'' AEON Credit Service to Hold as growth slows with larger profit base.

It said on Wednesday, March 9 it had cut the target price to to RM4.20, pegged to 7x FY12F EPS.

'FY12F-13F trimmed by 6-7% on slower loan growth.'' Share price supported by cheap 6.5x FY12F PE and projected 5.4% dividend yield,' it said.

HDBSVR said since its listing in December 2007, Aeon Credit's group net profit had been expanding at 41% CAGR. But growth will start to slow because of a larger earnings base (FY10-FY13F CAGR of 14%).

'This has prompted us to change our valuation metric from PEG to PE. Applying a 3-year historical average PE of 7x on FY12F EPS, we derive a lower target price of RM4.20 (from RM4.60),' it said.

HDBSVR said downside risk is limited by its undemanding PE valuation and decent FY12F net dividend yield of 5.4%. Downgrade to Hold as the stock ' which has risen 5.1% YTD ' offers only 13% total potential return (including dividends).

''

AEONCR - Aeon Credit Service downgraded to 'hold'

Stock Name: AEONCR
Company Name: AEON CREDIT SERVICE (M) BHD
Research House: HWANGDBS

AEON Credit Service (M) Bhd, a Malaysian consumer financing provider, was cut to “hold” from “buy” at HwangDBS Vickers Research Sdn Bhd to reflect slower loan growth.

The share estimate was reduced to RM4.20 from RM4.60, analyst Kok Chiew Sia wrote in a report today. - Bloomberg