AEONCR is a financial company and Peter Lynch provides a specific set of fundamental analyses for investors to determine financial companies' financial soundness and valuation.
Note: This analysis is conducted using its latest number of outstanding shares (248,355,252) as announced on 16/01/2018.
CLASSIFICATION:
According to Lynch's 6 categories of company, AEONCR is considered as a "Fast Grower". Since its IPO, AEONCR has grown its earnings at 25.9% CAGR.
REVENUE: [PASS]
AEONCR's revenue has grown at 23.2% CAGR within the same period. Given that the growth rate of earnings is higher than that of revenue, AEONCR has demonstrated improved operating efficiency.
DIVIDENDS: [PASS]
AEONCR would fall into the "Dividend Payers" sub-category according to Lynch. Its dividends paid to shareholders have increased at 30.1% CAGR.
EQUITY/ASSETS RATIO: [PASS]
According to Lynch, the Equity/Assets Ratio is the most important metric of all. It measures a way to determine a financial company's financial strength and survivability. AEONCR's Equity/Assets ratio is 19.1%. It is healthy and above Lynch's minimum requirement of 7.5%. It is, at the same time, higher than the statutory 16% requirement.
RETURN ON ASSETS: [PASS]
The Return on Assets measures a financial company's profitability. AEONCR's ROA is 3.9%, way above Lynch's 1% minimum requirement.
YIELD COMPARED TO KLSE: [PASS]
Although Lynch suggests that the Yield of a "Fast Grower" should be low, which includes being lower than the index benchmark average. However, the dividend yield for AEONCR is 3.5% versus approximately 2.5% yield of KLSE index.
P/E/GROWTH (PEG) RATIO: [PASS]
The trailing P/E/G ratio for AEONCR is 0.43 (divide trailing P/E 11.22x by 25.9% CAGR of earnings). When our calculation is based on the average of the 3, 5 and 10 year historical diluted EPS growth rates, their respective P/E/G ratio also suggests that AEONCR is undervalued.
Although Lynch does not emphasize Price/Book Value ratio, Warren Buffett has used it in conjunction with Return on Assets to extrapolate if a profitable bank is reasonably valued.
In many occasions, Buffett said that a financial company generating ROA above 1% should see its stock pricing above 1x P/BV.
P/Book Value RATIO: [PASS]
The trailing P/BV ratio for AEONCR is 2.23 (divide stock price RM13.46 by RM6.04 book value). In view of its ROA 3.9%, the P/BV ratio suggests that AEONCR is undervalued.
Would you invest in AEONCR?
http://valueveins.blogspot.my/2018/01/the-peter-lynchs-analysis-of-aeoncr.html
