AEONCR: Earning Dropped!

Result Update

For QE31/8/2018, AEONCR's net profit dropped 18.7% q-o-q but rose 13.0% y-o-y to RM80.6 million while revenue rose 2.3% q-o-q or 7.0% y-o-y to RM333 million. Pre-tax profit dropped 18.6% mainly due to higher impairment loss on financing receivables of RM95.263 million for the current quarter as compared to RM57.096 million for QE31/5/2018.


Table: AEONCR's last 8 quarterly results


Graph: AEONCR's last 45 quarterly results

Valuation

AEONCR (closed at RM15.86 yesterday) is now trading at a PE of 12.2 times (based on last 4 quarters' EPS of 130.19 sen). At this PER, AEONCR is deemed fairly attractive. In addition, it pays a decent dividend with DY of 2.7% (based on last year dividend of  42.25 sen).

Technical Outlook

In May, AEONCR broke above its November 2017 high of RM14.40. Since then, it has slowly climbed to a new all-time high of RM16.46 on September 27. Given the break in the steady profit growth, AEONCR share price is likely to drop back significantly for the next few days. Its immediate support at the horizontal line of RM15.00 may be violated. It may even test the next support at the horizontal line of RM14.40.


Chart 1: AEONCR's daily chart as at Oct 4, 2018 (Source: Malaysiastock.biz)


Chart 2: AEONCR's weekly chart as at Oct 4, 2018 (Source: Malaysiastock.biz)

Conclusion

Despite the surprising decline in its financial performance, AEONCR is still a good stock for long-term investment in view of its fairly attractive valuation and still positive technical outlook. However, the share price will be weak for the next few days or weeks. Any buying should be carried out slowly and with long-term horizon in mind. Good luck!

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.