Journey to Wealth
AEON Credit Service (M) - 1HFY13 results within expectations
Period 2Q13/1H13
Actual vs. Expectations
Within expectations. ACSM reported 1HFY13 net profit of RM60.2m that was 47% of ours and 46% of the consensus' estimate.
Dividends Declared an interim single tier dividend of 15.50 sen per share.
Key Result Highlights
The 2QFY13 total revenue of RM121.1m was up 36% YoY, driven mainly by higher gross receivables (+41% YoY) with a stable interest spread of 19%.
The group's 2QFY13 loans growth was mainly underpinned by higher contributions from the personal financing (+148% YoY), vehicle easy payment (+41%), general easy payment (+18%) and the credit card segments (18%). The net NPL remained low at 1.53% (vs. 1Q13: 1.68%).
The group's 2Q13 pretax profit of RM43.7m meanwhile rose by 39% YoY on the back of a higher revenue.
Its motor-cycle financing segment contributed 34% to the group's total revenue, followed by 16%, 25% and 18% from the credit cards, general easy payment and personal financing segments respectively.
The annualised ROE meanwhile was at a solid 33.4% vs. FY12's 30.7%.
Outlook The group's loan growth and credit quality outlook remained intact according to management, underpinned by its strong merchant distribution platform. Going forward, we view a 30% loan growth target in FY13 as achievable with a favourable outlook for its (i) Credit Card, (ii) Personal Finance and (iii) Motorcycle Financing divisions. This should result in an impressive 39% earnings growth in FY13.
However, we think the current share price could have priced in the strong earnings growth already.
Change to Forecasts
No changes in our forecasts.
Rating Maintained MARKET PERFORM
At the current level, the stock offers a potential capital downside of 3.7% but this is expected to be offset by a dividend yield of 4.1%, which brings the potential total return to only 0.4% over the next 12 months.
Valuation We have raised ACSM's ex-bonus target price to RM9.70 (from RM8.30 previously) based on 9.0x over FY14 EPS of RM1.08 as we roll forward our valuation year. The TP implies a 3.13x FY14 P/BV.
Risks Potential higher loan growth in 2012.
Source: Kenanga
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