RCE earnings growth likely to ease moderately

PETALING JAYA: CIMB Research is lowering RCE Capital Bhd’s financial year 2026 (FY26), FY27 and FY28 earnings forecasts by 3.7%, 4.5%, and 6.1%, respectively, to reflect more conservative receivables growth assumptions.

“Subsequently, we project slower net profit growth of approximately 1.3% year-on-year (y-o-y) in FY26, followed by y-o-y growth of 1.4% in FY27 and 1.3% in FY28, underpinned by higher fee-based income from the projected receivable growth and a 7.5% y-o-y reduction in impairment losses on receivables in FY26 following a 24.1% increase in FY25.

“Accordingly, we maintain our ‘reduce’ call on RCE with a lower dividend discount model-based target price of RM1 from RM1.23,” the research house added.

It said its valuation is based on an updated cost of equity of 8% and a slower long-term growth rate of 1%, owing to civil servants’ borrowing capacity being largely maxed out amid elevated debt and living costs, intensifying competition from digital lenders, and the absence of further salary adjustments beyond the second phase.