For QE31/5/2015, AEONCR's net profit dropped 5% q-o-q or 3% y-o-y to RM58 million while revenue was up 3% q-o-qor 16% y-o-y to RM232 million. Pre-tax profit for QE31/5//2015 improved marginally by 3% as compared to 3-mth ended 20/5/2014. This was brought on by higher financing receivables which rose by 21.61% (despite no growth in financing volume at RM844 mil cf. RM843 mil previously) and higher Other Op. Incomes which rose from RM13.7 million to RM23.8 million (due to increase in bad debts recovered, commission from sale of insurance products and AEON Big loyalty programme processing fee). These had more than offset the increase in non-performing loans (with NPL ratio increased from 2.18% to 2.74%); increase in total operating expenses ( the ratio of total operating expenses against revenue rose from 54.6% to 61.2% due to higher allowance for impairment losses on financing receivables); and higher average funding cost (though no number was given).
Table: Aeoncr's last 8 quarterly results
From the diagram below, we can see that profits are slowing with profit margin reducing and growth of both top-line & bottom-line tapering off.
Chart 1: Aeoncr's last 32 quarterly results
Valuation
AEONCR (closed at RM14.24 yesterday) is now trading at a PE of 10.2 times (based on last 4 quarters' EPS of 140 sen). At this PER, AEONCR is deemed reasonably valued.
Technical Outlook
AEONCR is in a consolidating mode after a sharp rally from RM4.00 in 2011 to nearly RM19.00 in 2013. Its immedaite support is at RM13.00 while the immediate resistance is at RM14.00.
Chart 2: Aeoncr's monthly chart as at Jun 25, 2015 (Source: ShareInvestor.com)
Conclusion
Based on good satisfactory financial performance and fair valuation, AEONCR is still a good long-term investment.
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.
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