Aeon Credit’s 2Q earnings in line with estimates

KUALA LUMPUR: Shares of the AEON Credit Service (M) Bhd rose over 3% in early trade Wednesday after posting earnings that are in line with estimates.

The counter jumped 38 sen, or 3.32% to RM11.82 at 9.49 am. Year-to-date, the counter has fallen over 6%.

For its second quarter ended Aug 31 (2Q24), Aeon Credit’s net profit rose to RM120.19mil from RM75.65mil in the previous corresponding period, while revenue improved to RM471.73mil from RM399.17mil a year earlier, mainly attributable to stronger loan and financing growth.

In the first six months (1H24), Aeon Credit’s net profit dropped to RM219.55mil from RM238.72mil in the previous corresponding period, while revenue improved to RM924.40mil from RM789.74mil previously.

“Aeon Credit’s 1H24 net profit of RM219.6mil came in within expectations, making up 53% each of both our full-year forecast and consensus’ full-year estimate.

“An interim 28.5 sen dividend was declared, at 34% earnings payout, which we also deem to be within our full-year expectation of 52.0 sen,” Kenanga Research said.

The research house said Aeon Credit continued to see a growing financing book and margins but appears to be offset by normalising impairment behaviour.

It has maintained its “outperform” on Aeon Credit with a higher target price of RM16.95 from RM16.15 previously.

“We continue to see strength in Aeon Credit’s fundamentals are they stand out against conventional banking institutions with ROE prospects of over 15% with more modest dividend yields (c.5%).

“As the digital banking space grows, we believe investors may see such license holders to possess more value propositions that may embolden the stock attractiveness. Specifically with microlending in mind, it could see strong traction in an eventual strong economic growth environment,” it added.