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