RHB Research has upgraded Aeon Credit Service From a Neutral Call to a Buy Call with a target price of RM19.20.
It said that its 1QFY23 results beat its Street expectations convincingly on a net reversal of impairments on top of an improved topline performance adding that the current share price provides an attractive entry point to capitalise on a possible share price re-rating adding that it is keeping its forecasts unchanged as it awaits the analyst briefing later today.
RHB said that after the recent profit-taking following Aeon Credit Service’s receipt of a digital banking license, the stock is currently trading at 1.54x FY23F P/BV, which is around -0.5SD from its 5-year mean.
RHB said that its net interest income improved 11.5% QoQ on the back of greater collection efforts following the Omicron-induced productivity setback in 4QFY22.
At the same time, It said that operating expenses came in lower by 6.8% QoQ, bringing 1QFY23 PIOP to MYR197.8m, or higher 22.8% QoQ.
On a YoY basis, lower topline contributions were offset by lower interest expenses (-9.4% YoY), and aided by receding operating expenses (-12.2% YoY). As a result, PIOP increased 1.2% YoY. For 1QFY23, CIR stood at 37.5% (1Q22: 40.9%, 4Q22: 44.2%), which is comfortably in line with its FY23 target of less than 60%.
