Aeon Credit (900 HK, HK$7.23, HK$3bn, Fair value HK$12.00) Solid 3Q with record Loan book and improving asset quality

3Q26 inline. Aeon Credit (ACSA) provides consumer credit in Hong Kong by issuing credit cards and providing personal loans. It reported a solid 3Q26 results, with revenue up 3.8% YoY to HK$461mn, inline with our expectation. Thanks to lower S&M expenses due to effective marketing strategies and enhanced brand recognition, total cost-to-income ratio narrowed by 1ppts YoY to 45%. Hence operating profit before impairment grew by 6.7% YoY to HK$237mn. Net profit amounted to HK$119mn, up 13.5% YoY, inline with our forecast. This marked the 5th  consecutive quarters of higher growth in profit than topline.

Healthy growth in total loan book. Gross advances and receivables reached HK$7.7bn in 3Q26, up 3% QoQ. This solid performance was driven by 2.7% growth of credit cards business thanks to targeted marketing and diverse promotions, and 3.9% increase in personal loan segment. ACSA focuses on steady loan book expansion supported by providing competitive rate of cash rebate and products to attract young customers. Its new bonus points platform, One AEON point project launched in 1H26, has made good progress. It is believed that One AEON could enhance customer loyalty and leverage credit card usage in partner merchants such as Aeon stores.

Sequential improvement in impairment losses through strong credit controls. Impairment losses dropped by 4.6% YoY and 2.4% QoQ to HK$99mn. With the local economy and tourism gradually recovering  ACSA continued to see improving asset quality and default rates through key initiatives such as implementing robust credit monitoring measures. As a result, ACSA successfully reduced impairment losses level below HK$100mn for the first time since 4Q24.

Our view: ACSA maintained robust topline momentum supported by its successful marketing strategy and competitive promotions. Meanwhile, the sequential improvement of impairment losses reflects its ability to control default risk, which may partly ease market concerns. We believe ACSA would continue to benefit from the resilient consumption demand in the Hong Kong market. Therefore, we maintain our FY26A/FY27E/FY28E revenue estimates at HK$1.88/1.97/2.0bn, respectively. FY26-28E EPS is expected to be 117/130/134 HK cents, respectively. Based on the DCF valuation, we value ACSA at HK$12.00. The current valuation corresponds to about 0.56x FY2/26E PB with an estimated yield of 7.2%.