MORNING CALL:29/9/23 - video Dailymotion

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9/28/2023

Kenanga thinks AEON Credit deserves a higher valuation

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00:00 Ending this short week is Kenanga's recommendation on Aeon Credit where Kenanga has an outperform.

00:06 After it announced its latest results, Kenanga upped its target price from RM16.15 to RM16.95,

00:12 which implies a possible upside of 44% from current levels.

00:16 Aeon Credit first half net profit of RM219.6 million came in within expectations, as was

00:22 its interim RM0.285 dividend that was declared.

00:26 Year on year, first half net interest income grew by 21% following an 11% expansion in

00:31 financing receivables backed by higher net interest margins.

00:35 The higher target price is attributed to a reduction in Kenanga's risk-free rate input

00:40 to 4%.

00:41 Aeon Credit may continue to appear burdened by comparatively high impairment charges,

00:45 but Kenanga does not see this as concerning given it could be seen as a normalisation

00:50 of trends.

00:51 That said, it is noted that the group has a high concentration of B40 customers, but

00:56 the group has worked to address repayment concerns with an increase in down payments

01:00 on new lower quality accounts and a refinement of collection strategies through an AI risk-based

01:05 calling model.

01:06 Kenanga continues to anticipate growth in the group's financing, mainly from its key

01:10 personal financing segment.

01:12 We are taking the most updated reports from Bloomberg since the earnings were just these

01:16 past few days and it's four buys and one loan hold from Afin Huang IB.

01:20 The average target price shakes out to RM15.23, which is around RM3.43 more than its last

01:26 close.

01:27 [Music]

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