CIMB Securities cuts Aeon Credit rating and target price amid rising credit costs

CIMB Securities Sdn Bhd moved Aeon Credit Service (M) Bhd to a "Reduce" stance from "Buy" and trimmed the target price to RM4.90 after the firm posted a second-quarter earnings shortfall. Analyst Ei Leen Tan reported that first-half net profit grew only 3.1% YoY to RM154.5 million, representing just a third of the broker's full-year forecast. Net credit cost surged to 538 bps in Q2, well above the 400 bps guidance, while the quarterly write-off ratio climbed to 1.5%.

Although gross non-performing loans fell slightly, the improvement reflected receivable growth rather than better credit quality. Core financing income rose 8.2% YoY, driven by broad receivable expansion, yet the broker cut FY27-FY29 earnings forecasts by over 20% and raised NCC assumptions for future periods.