Aeon Credit first half net profit of RM238.7m is within expectation on the basis for more balanced earnings on lower operating costs and more stable provisioning needs. The company’s interim dividend of 28.5 sen was also within expectation said Kenanga.
The research house believes the group will deliver more normalised earnings amidst a more stable economic and business environment, the street appears to still be anticipating asset quality challenges and higher operating cost. An interim dividend of 28.5 sen was declared, which is also within anticipated 62.0 sen full-year payment.
Healthy economic growth projections are likely to drive the group’s >10% loans growth target for FY23, which could also be fuelled by its more comprehensive digital offerings. Although a higher financing base may give rise to further asset quality risks, the group sought to tighten its credit policies by increasing down payments and push for shorter financing terms. Meanwhile, we opine the group would be able to sustain its CIR as a higher degree of automation (namely in credit processing) could translate to better cost savings in the near term.
Kenanga is not changing its earnings forecast for now, pending further updates from analyst briefing. Target price is also maintained at RM17.20.
