AEONCR: Bottom-line jumped

Result Update

For QE20/5/2014, AEONCR's net profit increased by 18% q-o-q or 36% y-o-y to RM56 million while revenue increased by 7% q-o-q or 40% y-o-y to RM201 million.

Revenue increased 40% y-o-y due to increase in interest income, profit revenue & finance charges (from RM120.2 million to RM173.2 million) as well as increase in fee income (from RM23.7 million to RM27.7 million). Because of these, AEONCR was able to record a 35%-increase in pre-tax profit, notwithstanding marginally  higher funding cost, higher non-performing loans (NPL) ratio (of 2.18% as at May 2014 compared to 1.57% as at May 2013);  and higher ratio of total operating expenses against revenue (at 54.57% as compared to 54.01% previously).

How AEONCR achieved this improved results since its Total Assets only inched up by 6.3% from RM3.767 billion to RM4.005 billion? With narrower interest margin; higher operating expenses; and a smaller increase in Total Assets - the bulk of which consisted of Financing Receivables which rose 7.6% to RM3.84 billion from RM3.57 billion - how did they do it? Fee income alone does not explain it.


Table: Aeoncr's last 8 quarterly results


Chart 1: Aeoncr's last 28 quarterly results

Valuation

AEONCR (closed at RM14.92 yesterday) is now trading at a PE of 11.3 times (based on last 4 quarters' EPS of 132 sen). Based on past 2-year historical CAGR of 35%, AEONCR's PEG ratio is about 0.3 times. At this low PEG ratio, AEONCR looks like an attractive growth stock again!

Technical Outlook

After the 6-month correction in 2H13, AEONCR transitioned into sideways movement for the past 4-5 months. If it can break above RM15.40, it may continue with its prior uptrend.


Chart 2: Aeoncr's weekly chart as at June 19, 2014 (Source: Tradesignum)

 
Chart 3: Aeoncr's weekly chart as at June 19, 2014 (Source: Tradesignum)

Conclusion

Based on good financial performance & attractive valuation, AEONCR is still a good stock for long-term investment. If it can surpass the RM15.40 resistance, AEONCR may rise again.

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.