Company Coverage
Aeon Thana Sinsap (Thailand) (AEONTS TB): Two More Quarters Required To Resolve HP Portfolio Asset Quality Issues
HOLD (Maintained)
Current price:
Target price:
Upside:
Bt90.25
Bt98.00
+8.6%
Analyst
Highlights
- Neutral tone during the analyst meeting.
- The Bangkok flooding should not have much of an impact on AEONT.
- Maintain HOLD with an unchanged target price of Bt98.00.
Analysis
- Neutral tone during the analyst meeting. We came away from Aeon Thana Sinsap (Thailand)’s (AEONTS) analyst meeting with a neutral view. Management remains prudent in its lending policy amid asset quality concerns in hire purchase and a weakening economic environment. However, the company shifted its lending mix toward higher yield products, which are personal loans. Management guided for another sale of written-off receivables in 2HFY27, which we expect to occur in 4QFY27.
- Deterioration in HP portfolio asset quality expected to be resolved in next two quarters. The deterioration in asset quality came from both the domestic hire purchase portfolio and Cambodia’s portfolio. The company has suspended new used-car HP applications in Thailand to address the asset quality issue, which management expects to be resolved within the next two quarters. Cambodian subsidiaries currently continue to be reported under consolidation, although AEONTS has waived its pre-emptive rights to subscribe to newly issued shares of AEON Specialized Bank (Cambodia), resulting in a decrease in its shareholding from 50.0% to 43.01%.
- Not much impact from flooding. The company has a well-diversified portfolio in terms of location and has been minimally impacted by the flooding in Bangkok and vicinity in late-Sep 26. However, the company is unable to evaluate the full impact as yet. AEONTS is not expecting a significant impact from the flooding. It has also launched debt holidays for its clients.
- No guarantee of sustained dividend interim payment. AEONTS has announced an interim dividend payment of Bt3.00. However, this increase is due to AEONTS’ anniversary celebration, and the company remains committed to its dividend policy of 30%. We expect AEONTS to maintain its interim dividend payment at Bt3.00 going forward.
Highlights
- Neutral tone during the analyst meeting.
- The Bangkok flooding should not have much of an impact on AEONT.
- Maintain HOLD with an unchanged target price of Bt98.00.
Analysis
- Neutral tone during the analyst meeting. We came away from Aeon Thana Sinsap (Thailand)’s (AEONTS) analyst meeting with a neutral view. Management remains prudent in its lending policy amid asset quality concerns in hire purchase and a weakening economic environment. However, the company shifted its lending mix toward higher yield products, which are personal loans. Management guided for another sale of written-off receivables in 2HFY27, which we expect to occur in 4QFY27.
- Deterioration in HP portfolio asset quality expected to be resolved in next two quarters. The deterioration in asset quality came from both the domestic hire purchase portfolio and Cambodia’s portfolio. The company has suspended new used-car HP applications in Thailand to address the asset quality issue, which management expects to be resolved within the next two quarters. Cambodian subsidiaries currently continue to be reported under consolidation, although AEONTS has waived its pre-emptive rights to subscribe to newly issued shares of AEON Specialized Bank (Cambodia), resulting in a decrease in its shareholding from 50.0% to 43.01%.
- Not much impact from flooding. The company has a well-diversified portfolio in terms of location and has been minimally impacted by the flooding in Bangkok and vicinity in late-Sep 26. However, the company is unable to evaluate the full impact as yet. AEONTS is not expecting a significant impact from the flooding. It has also launched debt holidays for its clients.
- No guarantee of sustained dividend interim payment. AEONTS has announced an interim dividend payment of Bt3.00. However, this increase is due to AEONTS’ anniversary celebration, and the company remains committed to its dividend policy of 30%. We expect AEONTS to maintain its interim dividend payment at Bt3.00 going forward.
HOLD (Maintained)
Current price:
Target price:
Upside:
Bt90.25
Bt98.00
+8.6%
Analyst
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This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at this link, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
