AEONCR: Earnings Dipped Marginally Q-o-Q

Result Update

For QE31/5/2016, AEONCR's net profit dropped 8% q-o-q but rose 8% y-o-y to RM63 million while revenue rose 1% q-o-q or 13% y-o-y to RM261 million. PBT dropped by 7% q-o-q mainly attributable to higher operating expenses and lower operating income. Operating income comprises  mainly  bad  debts  recovered,  commission  income from sale of insurance products and AEON Big  loyalty programme processing fees.


Table: AEONCR's last 8 quarterly results

AEONCR's net profit took a small dip but net profit is still above the recent "high" of RM58 million recorded in QE30/5/2015.


Chart 1: AEONCR's last 36 quarterly results

Valuation

AEONCR (closed at RM12.94 yesterday) is now trading at a PE of 8.5 times (based on last 4 quarters' EPS of 152 sen). At this PER, AEONCR is deemed fairly attractive. In addition, it pays a decent dividend with DY of 4.6% (based on last year dividend of 59.45 sen).

Technical Outlook

AEONCR is still in a downward channel, with support at RM10.00 & resistance at RM16.00.


Chart 2: AEONCR's weekly chart as at June 30, 2016 (Source: Kenanga/Chartnexus)

From the monthly chart below, we can see that MACD is poised to cross above the MACD signal line.


Chart 3: AEONCR's monthly chart as at April 21 (Source: ShareInvestor.com)

Finally, if we plot the price chart against the 4-quarter average q-o-q growth rate for revenue, PBT & PAT, we can see that the last round when financial performance took off in 2010-2011, the stock rallied from RM3.00 to RM18.00. Currently, AEONCR's financial performance is only beginning to turn up. Another 2-3 quarters of continuous growth could ignite another rally for the stock.


Chart 4: AEONCR's 10-year monthly chart & 4-Q average q/q growth for revenue, PBT & PAT (Source: ShareInvestor.com)  

Conclusion

Based on satisfactory financial performance and fairly attractive valuation, AEONCR is rated as 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.