Resilient credit card business supports topline – Aeon Credit (ACSA), which provides consumer credit mainly in Hong Kong through credit cards and personal loans, reported 1H27 results roughly in line with expectations for the period ended 31 August 2026. Revenue grew 7.2% YoY to HK$961mn, driven by 7.7% YoY growth in credit card receivables to HK$769mn, marking the sixth consecutive half-year of YoY topline growth. Thanks to effective cost control, operating profit before impairment amounted to HK$511mn (+7.4% YoY), and net profit grew 10.8% YoY to HK$259mn. An interim dividend of 28.0 HK cents per share has been declared, up 12% YoY.
Improving asset quality lift core segment profit – The credit card segment delivered 10.4% YoY profit growth, supported by cautious credit risk management, even as impairment losses rebounded slightly by 2.6% YoY amid macro uncertainty. Asset quality improved meaningfully, with the impairment-loss-to-revenue ratio declining to 22.0% (-1ppt YoY) and stage two and three receivables falling to 3.7% (-0.2ppt YoY) of the total loan book. Total impairment provisions stood at HK$278mn, representing 3.5% of gross advances and receivables.
New property loan broadens customer base – The personal loan business, which accounted for 18% of total revenue, recorded revenue growth of 4.1% YoY to HK$174mn and strong 31.8% YoY growth in segment profit to HK$15.2mn. This was primarily due to the company's new business initiative launched in May, which provides renovation loans and personal loans for property owners. This new product brings high-quality customers, leading to robust increases in personal loan receivables and enhanced profitability. We also expect further spillover effects, as property owners tend to have greater credit stability and stable credit card consumption demand, which could also broaden the core credit card business customer base.
Our view
We expect recovering inbound tourism and local consumption to act as the tailwinds for Aeon Credit’s businesses. The company is also taking proactive steps to boost transaction activity, including the upcoming launch of the unified AEON EcoZone rewards platform to strength customer loyalty. Its stable funding cost and improving asset quality provide a supportive backdrop for earnings expansion. In addition, Mgt’s target of breaking even in the Mainland business should further enhance overall profitability, following a manageable loss in the Shenzhen lending business during the period. We believe our full-year profit growth is achievable, underpinned by a resilient core credit card business and ongoing digital efficiency upgrade.
Accordingly, we maintain our revenue estimates for FY27E, FY28E, and FY29E at HK$2.03bn, HK$2.11bn, and HK$2.21bn, respectively. FY27E–FY29E EPS is expected to be 148, 153, and 157 HK cents, respectively. Based on our DCF valuation, we assign a fair value of HK$12.20 per share. The stock currently trades at approximately 0.74x FY2/27E P/B, with an estimated dividend yield of 6.7%.