AEONCR (5139) : Aeon Credit weighed by asset quality risk, weaker economic outlook
KUALA LUMPUR: Alliance DBS Research expects the operating environment for Aeon Credit Services Malaysia (ACSM) to remain to remain tough amidst softer consumer sentiment.
It said on Friday it was continuing to keep an eye on non-performing loans (NPL) ratios as further asset quality deterioration could pose downside risk to earnings
“ACSM’s share price has fallen 29% since its 2QFY15 results due to concerns of asset quality risk which was further aggravated by the weaker outlook on the domestic economy,” it said.
The research house said it had cut FY15-FY17F earnings by 7%-19% as it imputed higher credit costs of 4.3/4.4/4.5% (from 4.2/4.3/4.4%) and lower the yield assumptions by 77/119/146 basis points.
“FY15F loan growth target maintained at 29% (a slowdown from 52% in FY14). We expect its motorcycle easy payment (MEP) and car easy payment (CEP), which account for 50% of ACSM’s loan book, to continue to drive ACSM’s loan growth.
“Although MEP growth moderated to 6% on-quarter in 2Q15 (versus 9% in 1Q15), motorcycle registrations have picked up since, which should improve loan momentum going forward.
“However, we remain cautious on the possibility of Bank Negara imposing further tightening measures on consumer financing (personal loans and credit card) in an attempt to curb excessive household indebtedness,” it said.
Alliance DBS Research following the cut in earnings, its TP is revised down to RM11.40, based on 8.0 times CY15F EPS (previously 10 times) which represents its 5-year average PE multiple. It had switched its valuation method to price-to-earnings (from price-to-earnings growth) as growth prospects have dimmed.
http://www.thestar.com.my
KUALA LUMPUR: Alliance DBS Research expects the operating environment for Aeon Credit Services Malaysia (ACSM) to remain to remain tough amidst softer consumer sentiment.
It said on Friday it was continuing to keep an eye on non-performing loans (NPL) ratios as further asset quality deterioration could pose downside risk to earnings
“ACSM’s share price has fallen 29% since its 2QFY15 results due to concerns of asset quality risk which was further aggravated by the weaker outlook on the domestic economy,” it said.
The research house said it had cut FY15-FY17F earnings by 7%-19% as it imputed higher credit costs of 4.3/4.4/4.5% (from 4.2/4.3/4.4%) and lower the yield assumptions by 77/119/146 basis points.
“FY15F loan growth target maintained at 29% (a slowdown from 52% in FY14). We expect its motorcycle easy payment (MEP) and car easy payment (CEP), which account for 50% of ACSM’s loan book, to continue to drive ACSM’s loan growth.
“Although MEP growth moderated to 6% on-quarter in 2Q15 (versus 9% in 1Q15), motorcycle registrations have picked up since, which should improve loan momentum going forward.
“However, we remain cautious on the possibility of Bank Negara imposing further tightening measures on consumer financing (personal loans and credit card) in an attempt to curb excessive household indebtedness,” it said.
Alliance DBS Research following the cut in earnings, its TP is revised down to RM11.40, based on 8.0 times CY15F EPS (previously 10 times) which represents its 5-year average PE multiple. It had switched its valuation method to price-to-earnings (from price-to-earnings growth) as growth prospects have dimmed.
http://www.thestar.com.my
