KUALA LUMPUR: Shares in RCE Capital Bhd rose ove 4% in early trade Friday after the company beat analysts expectations on its latest quarterly results.
The consumer finance company advanced 4.03%, or 11 sen to RM2.84 at 9.07am.
RCE’s net profit for the first quarter ended June 30, 2021 (1Q) surged 55.04% to RM35.39mil against RM22.82mil a year ago.
Its revenue rose 20.6% to RM78.04mil from RM64.72mil in the previous corresponding quarter on higher early settlement and net fee income.
Maybank Investment Bank Research said RCE’s 1QFY3/22 net profit of RM35.4m was above its expectations at 29% of its full year (FY) estimate.
“Yet, 1QFY3/22 revenue of RM78mil was within our expectations at 26% of our FY estimate.
“Outperformance of the former was largely due to lower than expected credit cost. No dividends were declared but this was within our expectations as
dividends are traditionally declared in 2Q and 4Q,” it said.
Maybank IB is maintaining its earnings estimate, buy call and RM3.05 target price on an unchanged 1.2x end-CY22E P/BV.
“Potential re-rating catalysts are RCE obtaining Shariah status come Nov 2021, raising its dividend payout ratio policy from 20-40% currently (FY3/21A: 37.5%) and securing a digital banking license,” it added.
RHB Research said RCE’s results were largely in line with the house and consensus expectations (circe 28% of full-year). ROE was stable quarter-on-quarter at 18.1%.
“Overall business operations remained highly resilient amidst the latest lockdown. Collections were healthy, with asset quality steady despite the allowance cut among civil servants. Although early settlement income could be QoQ lower, we believe RCE Capital will recoup the losses.
“With the shariah listing status application on track to meet the November deadline, this positive catalyst should be a meaningful re-rating event,” RHB said.
RHB has maintained its "buy" call on RCE Capital with a target price of RM3.20.