AEONCr- running faster to stay in place

Result Update

For QE20/11/2013, AEONCR's net profit was unchanged q-o-q but rose 22% y-o-y to RM43 million while revenue increased by 95 q-o-q or 47% y-o-y to RM178 million.


Table: Aeoncr's last 8 quarterly results

We can see the dip in the profit margin is shown on Chart 1. If you look at Chart 2, we can see that the average quarterly change in top-line and bottom-line seems to diverge in the past 6-7 quarters, with top-line quarterly growth inching higher while bottom-line quarterly growth drifting lower.


Chart 1: Aeoncr's last 26 quarterly results


Chart 2: Aeoncr's average quarterly change in top-line & bottom-line for last 22 quarterly results 

Valuation

AEONCR (closed at RM15.10 yesterday) is now trading at a PE of 13.0 times (based on last 4 quarters' EPS of 116 sen). With weaker consumer sentiment and possible increase in finance cost, the earning of AEONCr is likely to slide further. Thus the PE ratio is likely to increase in the next few quarters. At this moment, AEONCr is deemed fairly valued.

Technical Outlook

AEONCR is still in an uptrend but it is corrected back to its 50-week EMA line at RM14.93 (or RM15.00). If the stock can stay above this support, the uptrend will still be intact. A break below this support would bring forth further consolidation. The next support could be at RM14 & RM12.


Chart 3: Aeoncr's weekly chart as at Dec 23, 2013 (Source: Tradesignum)
 
Conclusion

Based on satisfactory financial performance, fair attractive valuation & still positive technical outlook, AEONCR is rated a HOLD. However, if the share price were to break below the RM15.00  mark or the net profit were to drop next quarter, the rating would be adjusted to REDUCE.

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.