KUALA LUMPUR (Dec 24): AEON Credit Service (M) Bhd was the top gainer in the mid-morning on Friday (Dec 24) after the consumer finance company's net profit more than doubled for the third quarter ended Nov 30, 2021 (3QFY22).
The counter, which opened at RM13.54 — 24 sen more than its last adjusted closing price of RM13.30 a day earlier — rose by 3.91% to a high of RM13.82 before pairing some gains.
At 10.53am, the stock was still up by 38 sen or 2.86% at RM13.68, with 50,700 shares transacted so far, giving it a market capitalisation of RM3.4 billion.
On Thursday, AEON Credit saw its third-quarter net profit jump 145.5% to RM103.46 million from RM42.15 million a year earlier on lower financing receivables with allowances for impairment losses.
The sharply higher earnings came in despite revenue falling to RM376.47 million from RM401.47 million a year prior.
On a quarter-on-quarter basis, AEON Credit managed to improve its net profit by 37.1% from RM75.48 million.
Meanwhile, Kenanga Research maintained its "outperform" rating of AEON Credit with a higher target price of RM16.60 (from RM13.30) and said the firm's core net profit of RM337 million for the cumulative nine months ended Nov 30, 2021 (9MFY22) beat the house/street’s full-year estimates by 104%/93%, mainly on lower-than-expected impairment losses, fuelled by write-back of credit loss expected earlier.
"Looking ahead, we expect receivables/volume recovery and lower impairments as management’s stringent asset quality control bears fruit.
"We raise our FY22-23 earnings [estimates] by 28%-9% on lower impairment assumptions and raise [our] dividend per share [forecasts] to 50 sen each year.
"We roll forward our valuation using FY23 price-earnings ratio of 10.6 times (three-year mean)," it said.