99 Speed Mart Up 14% on Its Debut. What Investors Need to Know？
$99SMART (5326.MY)$ made its debut on the Main Market on Monday, opening at RM1.85, representing a 12.1% increase or a premium of 20 sen over its IPO price of RM1.65. The stock price ended the day nearly 14% higher, closing at RM1.880.
99 Speed Mart's IPO is the largest in Malaysia in seven years, raising a total of RM2.36 billion, which includes RM1.7 billion from the sale of 1.028 billion shares by founder and CEO Lee Thiam Wah and his wife, Ng Lee Tieng. The public offering consisted of 400 million new shares, generating up to RM660 million. The IPO was oversubscribed by 3.04 times.
Lee Thiam Wah's retail journey began with a roadside stall in Malaysia, leading to the opening of a grocery store in 1987. A decade later, he operated eight stores named Pasar Mini 99. Today, this entrepreneur has transformed that humble beginning into a sprawling retail empire, with over 2,600 convenience stores nationwide. With his company now listed in Kuala Lumpur, the 60-year-old will achieve billionaire status.![]()
Investors are closely monitoring all developments regarding 99 Speed Mart, and below is a more detailed introduction to this retail giant.
Market Position and Competitive Landscape
As the largest mini-market chain in Malaysia, 99 Speed Mart commands a 40% market share in its segment and nearly 12% among all grocery retailers. The company is strategically positioned against its closest peer, Mr DIY Group (M) Bhd, and is leveraging its unique market position to capture additional market share through aggressive expansion and enhanced service offerings.
Solid Q2 FY24 earnings performance
In its second quarter of FY2024, 99 Speed Mart reported a 66.3% year-on-year increase in net profit, amounting to RM125.53 million. This was driven by higher sales from its expanded number of outlets and higher other operating income. Total revenue for the quarter rose 8.2% to RM2.42 billion, bolstered by the addition of 59 new outlets, bringing the total to 2,646. Notably, the company's other operating income, which includes product display fees and distribution center fees, constituted nearly half of its profit from operations, underscoring the effectiveness of its diversified revenue streams.
For the first half of FY2024, net profit increased 41.7% to RM258.87 million, with revenue rising 8.6% to RM4.84 billion. This performance illustrates the company's ability to maintain growth despite competitive pressures in the retail sector.
Dividend Policy and Financial Health
99 Speed Mart has adopted a 50% dividend payout policy, supported by strong cash flow generation and a healthy balance sheet, which currently holds a net cash position. However, the projected dividend yield at the IPO price is relatively modest at 1.8%, which may deter some dividend-focused investors. Nonetheless, the company's commitment to maintaining this payout policy indicates a focus on returning value to shareholders as growth stabilizes.
Strategic Growth Initiatives
The proceeds from the IPO will be strategically allocated, with 59% earmarked for expanding the company's network of outlets, 15% for establishing new distribution centers, 8.3% for acquiring delivery trucks, and 7.2% for upgrading existing facilities. Such initiatives are aligned with 99 Speed Mart's goal to increase its outlet count to 3,000 by 2025, reinforcing its position as a market leader in the mini-market segment.
99 Speed Mart's listing attracted 14 cornerstone investors that included abrdn Asia Ltd. and UOB Asset Management (Malaysia). Analysts have set a fair value for the company between RM1.75 and RM1.98, reflecting a price-to-earnings ratio of approximately 30 times its projected earnings for FY2025. Hong Leong Investment Bank (HLIB) anticipates a compound annual growth rate (CAGR) of 13.1% in revenue and 15.8% in net profit over the next three years, driven by the planned opening of 250 retail outlets annually and stable same-store sales growth.
Future Prospects and Southeast Asian Expansion
99 Speed Mart Retail Holdings Bhd deserves a "premium" valuation, says TA Research, considering its consistent revenue growth, operational efficiency and strategic expansion.
Looking forward, 99 Speed Mart's management has expressed openness to exploring opportunities for expansion into Southeast Asia, contingent upon favorable market conditions. The ongoing enhancement of its e-commerce capabilities, particularly in bulk sales, positions the company to capitalize on the growing trend towards online shopping.
TA Research expects 99 Speed Mart's sales growth for the financial years of 2024 to 2026 (FY24 to FY26) to be between 4.7% and 7.6%.It forecast the group's net profit to grow by 11.4% in FY24, 10.6% in FY25 and 11.5% in FY26.
Source: Bloomberg, the Edge Malaysia, the Star
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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103916021 : k
Teen Titan : Tomorrow RM2.00 climbing over
sensible Camel_0495 : RM3.00 by this Friday I am happy
Xekill : everybody buying this like is mrdiy
boss confirm support sebab mau masuk klci30
jobless jack : i feel it for steep valuations, i doubt it's may not be able to sustain at this valuation for long-run. let's see how my analysis goes.
fyi. i am not certified analyst
102181510 :![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
103819811 : For long-term is OK, Mr DIY Only have few hundred stores can go double, Y not 99 Speedmart? Just the matter of time. My target is RM3. 50.
Tonny91 : hai .im newbie .can someone lead me
104476495 : hi
103626532 :![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
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