logo
Analyst cuts Aeon Credit forecasts on digital bank losses

Analyst cuts Aeon Credit forecasts on digital bank losses

KUALA LUMPUR: CIMB Securities has lowered its earnings forecasts for Aeon Credit Service (M) Bhd for financial years 2026 to 2028, citing anticipated losses from its digital banking associate, Aeon Bank.
Aeon Credit, which holds a 50 per cent stake in Aeon Bank, expects to incur losses of between RM80 million and RM90 million from the digital venture due to continued expansion and product development costs.
In a note, CIMB Securities projected Aeon Bank to post losses of RM85 million in financial year 2026 (FY26), RM60 million in FY27 and RM35 million in FY28.
"We forecast continued losses in FY28, reflecting a more cautious stance amid a weak macro backdrop, prolonged gestation period for digital platform profitability, and sustained tech-related cost pressures," the firm said.
As a result of its 50 per cent stake, Aeon Credit will book half of Aeon Bank's losses into its own earnings over the forecast period.
CIMB Securities also factored in a 25-basis point cut in the overnight policy rate (OPR), but noted that the impact on earnings would be minimal.
This is because Aeon Credit's lending rates and funding costs are largely fixed, with about 65 per cent of its funding sourced from Japanese banks at stable rates.
The research house expects Aeon Credit to report a net profit of RM96.8 million for the first quarter of FY26, representing a 26.1 per cent quarter-on-quarter drop and a nine per cent decline year-on-year. The company is scheduled to release its results on July 8.
CIMB Securities maintained its "hold" recommendation on the stock, but revised its target price slightly lower from RM5.80 to RM5.70.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Latest Fiscal Support Measures Positive For Consumer Sector -- CIMB Securities
Latest Fiscal Support Measures Positive For Consumer Sector -- CIMB Securities

Barnama

time9 hours ago

  • Barnama

Latest Fiscal Support Measures Positive For Consumer Sector -- CIMB Securities

BUSINESS KUALA LUMPUR, July 23 (Bernama) -- The latest fiscal support measures announced by Prime Minister Datuk Seri Anwar Ibrahim are expected to bolster Malaysia's consumer sector by reinforcing near-term spending, particularly on essential goods and value-based retail, said CIMB Securities Sdn Bhd. CIMB Securities, however, is keeping its earnings forecasts unchanged at this juncture, noting that the measures would underpin existing revenue growth assumptions for the stocks under its coverage. 'Within the consumer sector, we continue to advocate focusing on companies benefiting from inelastic demand for daily necessities and those well-positioned to capture consumer downtrading trends by targeting the mass-market segment,' it said. CIMB Securities highlighted that food and beverage (F&B) manufacturers, such as Nestle, F&N, QL Resources, and Farm Fresh, are likely to benefit from stronger demand for basic food and beverage products, many of which are likely to be eligible for purchase using the RM100 credit. It opined that other retailers such as Mr DIY ('Buy' call), Padini (Buy), Aeon (Buy), Yoong Onn (Buy), Bonia (Hold), Berjaya Food and SEM (Reduce) could see improved footfall and higher spending per customer as disposable incomes increase, amplified by the recent 25 basis points overnight policy rate cut to 2.75 per cent. 'As such, we maintain our 'Neutral' call on the sector. We believe valuations are fair at this juncture, reflecting the ongoing soft consumer sentiment and higher sales tax on discretionary goods, the impact of boycott activities on selected consumer names and cost pressures from the expanded Sales and Service Tax (SST) on rental costs,' it said. Earlier today, Anwar unveiled a new round of fiscal support measures aimed at alleviating living costs, stimulating domestic consumption, and boosting household spending ahead of the upcoming Merdeka Day and Malaysia Day celebrations. Key measures include a one-off RM100 e-credit via MyKad (SARA scheme), doubling the Rahmah Madani Sales programme budget to RM600 million for 2025, a public holiday on Sept 15, 2025, to encourage domestic travel, a toll rate freeze for 2025 and maintaining RON95 subsidies, with the subsidised price to be reduced from RM2.50 per litre to RM1.99 per litre for all Malaysians. -- BERNAMA

CIMB Overweight On Telco After Significant Quality Improvement
CIMB Overweight On Telco After Significant Quality Improvement

BusinessToday

time11 hours ago

  • BusinessToday

CIMB Overweight On Telco After Significant Quality Improvement

CIMB Investment Bank Bhd (CIMB Securities) has maintained an OVERWEIGHT call on Malaysia's telecommunications sector, with BUY ratings on Axiata Group, CelcomDigi, Maxis and Telekom Malaysia, citing significant improvements in mobile and fibre broadband coverage and quality of service (QoS) across the country. The sector's performance has been driven by the successful implementation of the Malaysian Communications and Multimedia Commission's (MCMC) Jalinan Digital Negara (Jendela) programme. As of end-2024, 4G population coverage has reached 98.7%, with most states nearing full coverage, while the number of fibre premises passed has surged to 9 million, achieving the Jendela Phase 2 target a year ahead of schedule. CIMB Securities highlighted that mobile network operators have largely met the MCMC's Mandatory Standards on Quality of Service (MSQoS), with Opensignal data showing improved average download speeds at 34 Mbps for 4G and 228 Mbps for 5G, both comfortably above the 10 Mbps MSQoS threshold. However, some non-compliance issues persist. In the first quarter of 2025 alone, the MCMC issued 135 notices out of 1,257 testing sessions, and over 2023–24, a total of RM6.6 million in compounds was issued for 46 unresolved incidents. Despite these isolated setbacks, the report noted that telcos have made substantial strides in narrowing the coverage gap in East Malaysia. Between the second quarter of 2020 and end-2024, 4G coverage in the region rose from around 73–74% to between 91–94%. Latency for fibre broadband also remains low, with Speedtest reporting a 7 ms average in June 2025, well within the MSQoS requirement of 50 ms. CIMB Securities warned that failure to maintain wide-reaching, reliable services could expose telcos to environmental, social and governance (ESG) risks, such as regulatory penalties or reputational damage. These risks could include spectrum bid disadvantages, customer churn or brand erosion, particularly if companies are perceived as less inclusive or socially responsible. Globally, Malaysia ranked sixth in Asia for mobile network experience and ninth for fixed broadband, according to Opensignal and Speedtest. The house attributed the lower fixed broadband ranking to market subscription patterns rather than infrastructure deficiencies, pointing out that all major providers offer plans up to 2 Gbps. CIMB Securities' top picks in the sector include Maxis with a target price of RM4.15, CelcomDigi at RM4.10, Telekom Malaysia at RM7.55, and Axiata at RM2.55. Time dotCom was rated a 'Hold' with a target price of RM5.30. Related

Malaysian telcos make solid progress on mobile, fibre coverage
Malaysian telcos make solid progress on mobile, fibre coverage

New Straits Times

time14 hours ago

  • New Straits Times

Malaysian telcos make solid progress on mobile, fibre coverage

KUALA LUMPUR: Mobile and fibre broadband coverage and quality of service (QoS) in Malaysia have improved significantly between 2020 and 2024. This was largely driven by the Malaysian Communications and Multimedia Commission's (MCMC) Jalinan Digital Negara (Jendela), according to CIMB Securities. The progress is reflected in Malaysia's commendable sixth-place ranking in Asia (ex-China) for mobile services, the firm said. "Although Malaysia ranks a moderate ninth in Asia for fibre broadband, we believe this reflects the plan subscription mix rather than weak network QoS. "Notably, fibre premises passed hit nine million at end-2024, one year ahead of the Jendela Phase 2 target," it added. CIMB Securities believes the substantial progress in coverage and QoS will help the industry mitigate potential material environmental, social and governance (ESG) risks, particularly on the regulatory and reputational fronts. Telcos have met or exceeded the Jendela Phase 1 targets at end-2022. Since then, 4G coverage had further risen to 98.7 per cent with most states at or close to 100 per cent as at end-2024, while fibre premises passed have hit nine million (81 per cent since September 2020), one year ahead of the Jendela Phase 2 target. While there is still room to improve 4G coverage in Sabah and Sarawak, the industry has made significant progress in raising this from 73-74 per cent to 91-94 per cent between 2Q20 and end-2024. CIMB Securities said Malaysian telcos are increasingly expected by the MCMC)and the public to expand their network coverage to provide good and reliable QoS at affordable prices to support digital inclusion. Failure to meet these expectations exposes telcos to material ESG risks. This includes regulatory risk such as fines, licence suspension or reduced chances of success in future spectrum bids, and reputational risk. This may lead to diminished brand equity and increased customer churn to competitors perceived as more socially responsible and inclusive.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store