AEON Thana Sinsap

AEON Thana Sinsap Plc (AEONTS) 

 

In line with expectation, 4QFY15 profit (21 November –20 February) rose 12% YoY and 20% QoQ to Bt660mn, mainly driven by a QoQ reduction in provisions (-11% QoQ) and opex (-16% QoQ). Hit by the slash in its debt collection fee from Bt180/month to Bt100/month since January this year, net interest income (including fee income) fell 7% QoQ, despite 7% YoY and 1% QoQ loan growth. Non-interest income fell 19% QoQ, mainly on the absence of gain from sale of written-off NPLs. Its NPLs fell 8% QoQ, bringing NPL ratio down to 3.3% from 3.7% at 3QFY15. A fall in credit cost to 7.2% in 4QFY15 from 8.1% in 3QFY15 led to a cut in LLR coverage to 114% from 117% at 3QFY15. 

Changing fiscal year. Starting FY2016, AEONTS is moving its fiscal year end from February 20 to the end of February of the following year. The company disclosed a net profit of Bt149mn for February 21-29, 2016. Our FY2016-2018 forecasts are based on the old fiscal year and we put our forecast under review as we switch to the new fiscal year but do not expect this to make a material change.   

Maintain Buy. We see its valuation as undemanding at 8.9x PER and 1.7x PBV relative to 21% ROE for FY2016 and still Buy, expecting 10% earnings growth in FY2016 as loan growth continues to pick up, opex is tightened and contribution from its CLMV subsidiaries rises.