Q4 FY2026

 AEONCR had announced its quarter report Q4 FY2026 a few weeks ago, as below:

Not bad in general, revenue grows y-o-y, net profit grows y-o-y, and most importantly, dividend grows y-o-y as well.

As an investor of this company, I would like to find out why AEONCR performs so well this quarter. I have compiled the quarterly financial data of AEONCR as below. 

I believe the good profit of Q4 FY2026 is due to the reversal of impairment loss of + RM72M (vs - RM 14 M in Q4 FY 2025). From AEONCR presentation slide, they said that "Impairment loss reversal in Q4 was mainly attributed a one-off adjustment of RM131 mil arising from the restaging of AKPK provisions from stage 3 to stage 2, offset by receivables movement of RM129 mil and ECL refresh of RM27 mil respectively".

From what I have gathered from Google AI (plus some guesses), AEONCR needs to set aside some "allowances" of impairment loss for 3 different loan stages. I guess these stages are D0, D1, D2.... DN. where N  could be number of months passed. D3 is the most critical one, which it will be classified as D3+ (Non-Performing Loan) if the loan is not settled by the customer. For these different stages, AEONCR will set aside more allowances if the loan is moved from D2 to D3. During Q4 FY2026, somehow, there is a restaging from D3 to D2, so AEONCR is allowed to write-back the previous allowances made. Note that it is only one-off.

I have also highlighted the D0, D1 and D2 collection ratio. Apparently, the Management has ramped up its effort to increase the collection ratio, which is a good sign.

In fact, AEONCR business is growing.... This can be proven from its fast-growing gross financing receivable (loans approved) yearly. However, there are several factors affecting its profit growth in recent years, especially after COVID. I will list them below

(1) Non-Performing Loan (NPL)% at relatively high level. The loan is classified as NPL when the loan is classified as D3+ (already past 3 months but not paid back to AEONCR?). After COVID, it seems that the NPL is higher than that before. This is likely due to the higher living cost and inflation. Note that the customer base of AEONCR is mainly from B40, so they would definitely feel the pinch during inflation.

In fact, the Management has been consistently mentioning that write-offs are mainly from young age (<25 years) and lower-income customers, affected by rising cost-of living pressures. Several mitigation plans have been implemented, here are what I have observed (extracted from their presentation slide):

• Superbike Financing growth of 51.2% YoY, reflecting a shift towards higher-score customers and premium product 
• Payment Business targeting the middle-income group, coupled with the new card launches, lifted receivable by 16.5% YoY, increasing portfolio share to 7.1% 
• Personal Financing recorded marginal QoQ growth due to credit refinement on young age and low-income group 
• Continued focus on digital onboarding adoption and  strengthening asset quality

All in all, the company wishes to lend monies to personnel with higher credit scoresM40 or above). However, from my opinion, this means AEONCR will likely to face more competitors in this market segment.

(2) Loss from AEON Bank. AEONCR owns 50% of AEON Bank, which is a new digital bank in Malaysia. In FY 2026, AEONCR has recorded RM 85M loss from AEON Bank alone (vs RM 68M in last year). Hopefully the loss has peaked in FY 2026.

Valuation

There is a strong correlation between Price to Book Ratio and ROE, as shown below.

The ROE of AEONCR has been downtrending since FY 2014. So, investors would pay less premium to this company. At the time of writing, the company is traded slightly below its book value of RM 6.

On the historical PER of AEONCR below, it seems that AEONCR is traded at single digit PER since FY 2023, which I think is due to the lumpy earnings reported. It is currently (7 May 2026) traded at historically low PER regime.

Smooth sailing for AEONCR in future quarters!