Aeon Credit dips 7% on broader market weakness, downgrade

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KUALA LUMPUR (Dec 15): Aeon Credit Service Bhd dipped as much as 6.8%, tracking broder market weakness and after analysts downgraded the stock.

Shares of financial services provider Aeon Credit were down as much as 78 sen to RM10.66 before reducing losses.  

At 2.38pm, the counter was priced at RM10.70 with 288,700 shares traded.  

It was the third-largest decliner on Bursa Malaysia. For comparison, the FBM KLCI fell 31.22 points or 1.8%.

Earlier, AllianceDBS Research Sdn Bhd cut its earnings forecast for Aeon Credit by between 7% and 19% for financial years ending February 2015 (FY15) to FY17.
 
AllianceDBS said the earnings downgrade came on a weaker outlook for Aeon Credit. Following the earnings cut, AllianceDBS lowered its target price for
Aeon Credit shares to RM11.40 from the previously estimated RM16.30.

“Aeon Credit’s share price fell 29% since its second quarter of financial year 2015 (2QFY15) results due to concerns of asset quality risk, which was further aggravated by the weaker outlook for the domestic economy,” AllianceDBS said in a note.

AllianceDBS expected the operating environment to remain tough for Aeon Credit amid softer consumer sentiment.

“We continue to keep an eye on non-performing loan (NPL) ratios as further asset quality deterioration could pose downside risk to earnings,” AllianceDBS said.