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Wednesday, April 26, 2017

AEONCR: Surprisingly Strong Earning

Result Update

For QE28/2/2017, AEONCR's net profit rose 19% q-o-q or 18% y-o-y to RM80 million while revenue rose 4% q-o-q or 13% y-o-y to RM291 million. PBT rose 14% q-o-q mainly attributable to higher revenue and higher operating income.


Table: AEONCR's last 8 quarterly results

AEONCR's net profit is at a new "high"!


Graph: AEONCR's last 38 quarterly results

Proposed Capital Exercise

In late March, AEONCR announced a proposal for a Bonus Issue of 1-for-2 plus a Rights Issue of ICULs of 2-for-1 (which may be revised to 3-for-1 in the event the bonus issue is terminated). The surprising reaction from the market was a drop in the share price to RM15.38 (after an initial euphoria that led to a jump to RM17.22). I highlighted this price drop as a buying opportunity (here).

Valuation

AEONCR (closed at RM16.30 yesterday) is now trading at a PE of 9.3 times (based on last 4 quarters' EPS of 174.55 sen). At this PER, AEONCR is deemed fairly attractive. In addition, it pays a decent dividend with DY of 3.9% (based on last year dividend of  63 sen).

Technical Outlook

AEONCR has been trading in a range between RM10.80 & RM16.70. An upside breakout could lead to a rally to RM2.00-23.00 (based on a 1-time extension of the trading range).


Chart: AEONCR's weekly chart as at April 25, 2017 (Source: MalaysiaStock.biz)

Conclusion

Based on satisfactory financial performance and fairly attractive valuation, AEONCR is a good stock for long-term investment.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

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