8 Things That You Must Know About Aeon Credit Service Bhd

In 1997, Aeon Credit Service (M) Bhd (Aeon Credit) has started its business operations by offering Easy Payment schemes for the purposes of purchasing consumer durables via its appointed retail merchants and chain stores across Malaysia. Subsequently, on 12 December 2007, Aeon Credit was listed on the Main Market of Bursa Malaysia.

Presently, Aeon Credit has expanded to provide a comprehensive consumer financing solutions. This includes issuance of credit cards, provision of easy payment schemes, automobile financing and personal financing. As I write, Aeon Credit is worth RM 3.13 billion in market capitalization. Here, I’ll list down 8 things that you need to know about Aeon Credit before you invest.

#1: Stock Symbol

Ticker Symbol: KLSE: AEONCR / KLSE: 5139
Market Capitalization: RM 3.13 billion (21 February 2018)

Share Price: RM 13.48 (21 February 2018)

Industry: Finance

Syariah Compliant: Nope

#2: Growth Story

Aeon Credit has enlarged its network of branches, participating merchants and card members nationwide over the last 5 years. Here, I’ll list down some of its achievements thus far:

1. In 2017, it has 64 branches and service centres located in its shopping malls in major towns across Malaysia, up from 34 in 2012.

2. In 2017, it has built a network of 12,000+ participating merchants, up from 4,500+ in 2012.

3. In 2017, it has approximately 4 million card members in Malaysia, up from just under 1 million in 2012.

Thus, they have contributed to Aeon Credit’s growth in financing receivables during the period, up from RM 1.5 billion in 2012 to RM 6.4 billion in 2017.

Source: Annual Reports of Aeon Credit

#3: The Financials

I’ve compiled financial data of Aeon Credit since its listing in 2007. From it, I have discovered:

1. Revenue has grown by CAGR of 25.2%, up from RM 116.04 million in 2007 to RM 1.10 billion in 2017.

2. Shareholders’ earnings have grown by CAGR 29.7%, up from RM 19.70 million in 2007 to RM 265.03 million in 2017.

3. Dividend payments have grown by CAGR of 30.0%, up from RM 8.13 million in 2007 to RM 86.54 million in 2017.

4. Aeon Credit has achieved 10-Year Return on Equity (ROE) average of 26.34%. This means it has generated as much as RM 26.34 in annual earnings to it’s from every RM 100 in shareholders’ equity during the 10-year period from 2008 to 2017.
   

Thus, Aeon Credit has built a track record of delivering consistent growth in revenue, earnings and dividend payments to its existing shareholders over its first 10 years of its listing.

Source: Annual Reports of Aeon Credit

Source: Annual Reports of Aeon Credit

Source: Annual Reports of Aeon Credit

#4: Future Prospects

Here, I’ll list down a few key points that would contribute to Aeon Credit’s financial results in the immediate future:

1. As at 30 November 2017, Aeon Credit has reported having RM 7.03 billion in financing receivables, up from RM 6.44 billion which was reported on 28 February 2017, the cut-off date for its fiscal year end for 2017.

2. As at 30 November 2017, Aeon Credit has reported having 2.48% in non-performing loans (NPL) ratio which is comparable to levels that were recorded since Q4 2016 of 2.0% – 2.5%.

3. Aeon Credit intends to launch its Platinum Credit Card for its high-income customers & e-Money and its Prepaid Mastercard for its low to middle-income customers. Aeon Credit intends to continue to integrate its customer database with Aeon and Aeon BIG for group marketing purposes.

#5: Material Litigation

On 12 December 2017, Aeon Credit has received additional assessment with penalties by the Inland Revenue Board (IRB) for the assessment year 2010 up to the year 2016 amounting to RM 96.82 million, equivalent to 36.5% of earnings in 2017. Presently, Aeon Credit has appointed tax solicitors and is starting with its legal proceedings to challenge the validity and legality of IRB’s additional assessment against the company. Aeon Credit has also filed a judicial review application and applied for a stay order on 14 December 2017.

As I write, the board has stated that there will not be any material effect on Aeon Credit’s financial position from the additional assessment.

#6: Valuation

As at 22 February 2018, Aeon Credit is trading at RM 13.48 a share and has issued a total of 248.4 million ordinary shares. Therefore,

1. P/E Ratio
   Over the last 12 months, Aeon Credit has made a total of RM 297.80 million in shareholders’ earnings. Hence, it works out to be earnings per share (EPS) of RM 1.20. At a stock price of RM 13.48, Aeon Credit has a current P/E Ratio of 11.24.

2. P/B Ratio
   As at 30 November 2017, Aeon Credit has reported having RM 1.50 billion in shareholders’ equity. Hence, it works out to be net assets a share of RM 6.03. At a stock price of RM 13.48, Aeon Credit’s current P/B ratio works out to be 2,24.

3. Dividend Yields
   Over the last 12 months, Aeon Credit has paid out a total of RM 99.0 million in dividends to its shareholders. This works out to be 40 sen in dividends per share (DPS). If Aeon Credit is able to maintain DPS at 40 sen, its expected dividend yields are 2.97%.

#7: Investors Relation

For further enquiries or to request for additional investment information on Aeon Credit’s Investors Relation matters, you may click on the link below:

Website:

https://www.aeoncredit.com.my/aeon-corporate/investor-relations

Email:

ir_infor@aeoncredit.com.my

#8: Major Shareholders

The substantial shareholders of Aeon Credit with their latest shareholdings as at 30 April 2017 are as followed:

– Aeon Financial Service Co. Ltd: 59.70%

– Aeon Co. (M) Bhd: 2.15%

– Kong Goon Khing: 2.06%

– Aberdeen Asian Smaller Companies Investment Trust Plc: 1.96%

– J.P. Morgan Bank Luxembourg S.A.: 1.82%

If you are just getting started in learning about investing in the Asian Stock Market, we have created a full 15-Video Course for you to help you get up to speed on how to look for great investments in Asia. Click here to find out more.

There is no ads to display, Please add some