Aeon Credit Service (M) Berhad is principally engaged in the provision of easy payment schemes, personal financing schemes and issuance of credit cards under the international brand names of Visa and MasterCard. The personal financing schemes and certain easy payment schemes are based on Islamic principles.
Official website: https://www.aeoncredit.com.my/
Product/Service
Source: Aeon Credit Q4 2020 Financial Result
Revenue Population:
Official website: https://www.aeoncredit.com.my/
Product/Service
Source: Aeon Credit Q4 2020 Financial Result
Revenue Population:
Credit Card: 8.4%
Personal Financing: 32.2%
Objective Financing:5.4%
Motorcycle Financing: 32.3%
Auto Financing: 21.3%
SME Financing: 0.3%
E-money: 0.1%
Main revenue: Personal financing, motorcycle financing and auto financing.
Target Customer
B40 and M40 customers who working in private and public sector.
Competitor
Personal financing - Banks, RCECap and so on.
Motorcycle financing - Less competitor.
Auto financing - Banks, Elkdesa and so on.
Source of Income
Loan interest income - Spread of interest (Earn the difference between interest income and interest expense).
Source of Fund
Debt financing - Term loans/financing (main source).
Mitigate risk:
The long term loans/financing are granted for tenure ranging from two to six years and are repayable by way of bullet payment upon expiry of the term loans/financing. Advantage: Reduce liquidity risk. Disadvantage: Higher interest expense.
Term loans/financing - USD - loans from foreign countries - lower interest - borrowings in USD is fully hedged by cross currency interest rate swaps entered into by the Company upon initial drawdown of the borrowings - therefore the Company doesn't has foreign exchange risk.
62% - fixed rate.
38% - floating rate - 100bps decrease - increase in profit.
Strength of Personal Financing
1. Tenure of loan - 6 to 84 months - long tenure as a result of lower monthly repayment - increase the willingness of borrowing.
2. Willing borrow to B40 private sector employees (minimum annual income RM24,000) which other competitors not really want to target.
3. Low minimum annual income (minimum annual income RM24,000) requirement as compared to competitors.
4. Mode of installment payment - no compulsory of salary deduction.
5. No require to buy insurance.
Weakness of Personal Financing
1. Higher interest rate:
- interest rate is higher than the competitor CIMB Bank in B40 group.
2. Higher credit risk.
Strength of Motorcycle Financing
1. Less competitors.
2. Target niche market of motorcycle financing.
3. Finance a wide range of motorcycle brands - Bikes below and above 250cc.
4. More than 1,000 appointed motorcycle merchants throughout the nation.
Weakness of Motorcycle Financing
1. Higher credit risk.
Strength of Auto Financing
1. Target segment that’s not served by the banks or cannot get loans from conventional banks - able to charge premium interest rate due to higher risk.
2. Believe AEONCR borrow to customers who buy low value car - reduce the credit risk exposure to each customer.
3. Target niche market of used vehicle financing - to avoid direct competition with the banks.
4. Financing package allows financing for cars aged up to maximum of 16 years.
Weakness of Auto Financing
1. Higher credit risk.
Risk
Non-performing loans
Source: Aeon Credit Q4 2020 Financial Result
- Marginally decrease due to AEONCR target M40 group of customers.
- If customers have problems in meeting their obligations, encourage customers contact them early to discuss payment alternatives. Way to reduce the risk of non-performing loans.
Reason to Buy
1. Increase in revenue and profit.
2. Undervalue:
- No news talk about AEONCR. Abandoned by the market.
- Low PE.
Reason to Hold
1. Increase in revenue and profit.
2. If decrease in revenue and profit are affected by the external factor, e.g. financial services sector are performing bad. - Action: Average down.
Reason to Sell
1. Decrease in revenue and profit - change in fundamental. Symptoms: Financial services sector are performing well but bad performance.
2. Overvalue:
- when a lot of the news talk about AEONCR.
- increase in share price is faster than the increase in profit.
- lower high.
Good Analytical Website
https://fifthperson.com/aeon-credit-service/
Disclaimers
The research, information and financial opinions expressed in this article are purely for information and my own homework purpose. I do not make any recommendation for the intention of trading purposes nor is it an advise to trade. I will not be liable for any false, inaccurate, incomplete information and losses or damages suffered from your action. It would be best if you did your own research to make your personal investment decision wisely or consult your investment advisor. Thank you.
Personal Financing: 32.2%
Objective Financing:5.4%
Motorcycle Financing: 32.3%
Auto Financing: 21.3%
SME Financing: 0.3%
E-money: 0.1%
Main revenue: Personal financing, motorcycle financing and auto financing.
Target Customer
B40 and M40 customers who working in private and public sector.
Competitor
Personal financing - Banks, RCECap and so on.
Motorcycle financing - Less competitor.
Auto financing - Banks, Elkdesa and so on.
Source of Income
Loan interest income - Spread of interest (Earn the difference between interest income and interest expense).
Source of Fund
Debt financing - Term loans/financing (main source).
Mitigate risk:
The long term loans/financing are granted for tenure ranging from two to six years and are repayable by way of bullet payment upon expiry of the term loans/financing. Advantage: Reduce liquidity risk. Disadvantage: Higher interest expense.
Term loans/financing - USD - loans from foreign countries - lower interest - borrowings in USD is fully hedged by cross currency interest rate swaps entered into by the Company upon initial drawdown of the borrowings - therefore the Company doesn't has foreign exchange risk.
62% - fixed rate.
38% - floating rate - 100bps decrease - increase in profit.
Strength of Personal Financing
1. Tenure of loan - 6 to 84 months - long tenure as a result of lower monthly repayment - increase the willingness of borrowing.
2. Willing borrow to B40 private sector employees (minimum annual income RM24,000) which other competitors not really want to target.
3. Low minimum annual income (minimum annual income RM24,000) requirement as compared to competitors.
4. Mode of installment payment - no compulsory of salary deduction.
5. No require to buy insurance.
Weakness of Personal Financing
1. Higher interest rate:
- interest rate is higher than the competitor CIMB Bank in B40 group.
2. Higher credit risk.
Strength of Motorcycle Financing
1. Less competitors.
2. Target niche market of motorcycle financing.
3. Finance a wide range of motorcycle brands - Bikes below and above 250cc.
4. More than 1,000 appointed motorcycle merchants throughout the nation.
Weakness of Motorcycle Financing
1. Higher credit risk.
Strength of Auto Financing
1. Target segment that’s not served by the banks or cannot get loans from conventional banks - able to charge premium interest rate due to higher risk.
2. Believe AEONCR borrow to customers who buy low value car - reduce the credit risk exposure to each customer.
3. Target niche market of used vehicle financing - to avoid direct competition with the banks.
4. Financing package allows financing for cars aged up to maximum of 16 years.
Weakness of Auto Financing
1. Higher credit risk.
Risk
Non-performing loans
Source: Aeon Credit Q4 2020 Financial Result
- Marginally decrease due to AEONCR target M40 group of customers.
- If customers have problems in meeting their obligations, encourage customers contact them early to discuss payment alternatives. Way to reduce the risk of non-performing loans.
Reason to Buy
1. Increase in revenue and profit.
2. Undervalue:
- No news talk about AEONCR. Abandoned by the market.
- Low PE.
Reason to Hold
1. Increase in revenue and profit.
2. If decrease in revenue and profit are affected by the external factor, e.g. financial services sector are performing bad. - Action: Average down.
Reason to Sell
1. Decrease in revenue and profit - change in fundamental. Symptoms: Financial services sector are performing well but bad performance.
2. Overvalue:
- when a lot of the news talk about AEONCR.
- increase in share price is faster than the increase in profit.
- lower high.
Good Analytical Website
https://fifthperson.com/aeon-credit-service/
Disclaimers
The research, information and financial opinions expressed in this article are purely for information and my own homework purpose. I do not make any recommendation for the intention of trading purposes nor is it an advise to trade. I will not be liable for any false, inaccurate, incomplete information and losses or damages suffered from your action. It would be best if you did your own research to make your personal investment decision wisely or consult your investment advisor. Thank you.
No comments:
Post a Comment