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Thursday, April 17, 2014

AEONCR: Bottom-line improved

Result Update

For QE20/2/2014, AEONCR's net profit increased by 11% q-o-q or 23% y-o-y to RM48 million while revenue increased by 6% q-o-q or 43% y-o-y to RM188 million.

The Company's top-line increased by 9.5% and 31.4% for 4Q2014 & FY2014 due to increased financing transaction volume for the vehicle financing and personal financing operations.

The increased revenue plus lower funding cost - with average funding cost in February 2014 marginally lower compared to February 2013 - led to increase of 15% & 29% in pretax profit for 4Q2014 & FY2014. More importantly, the company's bottom-line- which was sputtering for past 2 quarters- had finally regained its upward trajectory. This goes against conventional wisdom that AEONCR's financial performance would be weaker due to weaker consumer sentiment and higher finance cost.


Table: Aeoncr's last 8 quarterly results


Chart 1: Aeoncr's last 27 quarterly results

Valuation

AEONCR (closed at RM15.16 yesterday) is now trading at a PE of 12.4 times (based on last 4 quarters' EPS of 122 sen). Based on past 2-year historical CAGR of 35%, AEONCR's PEG ratio is about 0.4 times. At this low PEG ratio and doubt of faltering growth momentum banished for now, AEONCR looks like an attractive growth stock again!

Technical Outlook

I have redrawn AEONCR's trendlines below. AEONCR has broken below its long-term uptrend line, SS at RM15 in late 2013. An intermediate downtrend line, RR formed but the stock broke above that downtrend line at RM14.50 in March 2014. Since then, it has been trading sideways with immediate resistance at the horizontal line at RM15 & immediate support at the psychological level of RM14.


Chart 2: Aeoncr's weekly chart as at April 16, 2014 (Source: Tradesignum)

Conclusion

Based on good financial performance, attractive valuation & mildly positive technical outlook, AEONCR's rating is now revised from a HOLD to a BUY. 

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, AEONCR.

4 comments:

lai said...

Hi Alex,

For AZRB, is that a cup and handle pattern or am i being delusional?

Thanks.

OS said...

Hi Alex , what do you think of Seal berhad . Technical and fundamental wise .. Seems like its on uptrend ..

Alex Lu said...

Hi lai

For AZRB, I see it as a case of a breakout of a long-term downtrend at RM0.75-0.77. It may go back up to RM0.90-0.95.

However, you have to be a bit careful as the stock may be played up to induce the shareholders to accept the current RI 6:8 (c/w free warrant 1:2 shares subscribed) at RM0.50 per share.

The closing date is April 30.

Alex Lu said...

Hi OS

Seal looks very interesting. Its annualized EPS for FY14 is 12.3 sen. This means a PE of 6x. Not expensive.

Chartwise, it maybe testing & possibly breaking to the upside of the line that connects all the high for the past 5-6 years. The breakout level is at RM0.75. Based on projection, its first price target may be RM1.10-1.20.

For this reason, this stock could be a trading BUY soon (after a breakout above RM0.75).