Period     4Q13/FY13

Actual vs. Expectations     FY13 net profit of RM134m was within our estimate and market expectation.

Dividends     A final DPS of 19.5 sen was proposed for FY13. This brings total interim and final dividends of 35.5 sen for FY13, representing a DPR of 38%.

Key Results Highlights     12MFY13 revenue grew 36% to RM467m mainly on increased financing and transaction volume in the business and receivables (+49%) segment. Total transaction and financing volume for FY13 was RM2.5b.

YoY, the 4Q13 net profit improved by 41% to RM39m backed by continued growth in business as well as better cost efficiency from the tremendous growth in financing receivables (+58%) and a lower ratio of net impairment loss over financing receivables. The NPL dropped from 1.81% to 1.74%.

QoQ, net profit rose from 12% attributed by the increased financing transaction volume. AEONC’s vehicle financing segment grew 31%, whereas its personal financing dropped by 8%. Meanwhile, other segments such as general easy payment slid marginally by 1%, while the credit cards segment was up by 7%.

Outlook     Contrary to recent media reports, AEONC has not decided on a specific structure for its capital raising exercise. Once decided and approved, management will make an announcement in due time.

AEONC plans to further strengthen its presence in the mass consumer credit by expanding its business network, as it banks on strong private consumption for local economic growth. It is looking at adding 12 more branches (current: 38) and 18 kiosks (current: 3) in FY14.

Change to Forecasts     We leave our numbers unchanged.

Rating     Maintain MARKET PERFORM

At current price, AEONC offers a total return of 7%.

Valuation    We have revised our TP to RM15.90 (from RM13.00 previously) as we roll forward our valuation to FY15 EPS based on 12x PE.

Risks     A higher than expected NPL could drag the earnings downward.

Source: Kenanga