Robust PMS segmental earnings are expected to drive AEON's earnings growth in sequential quarters despite potentially sluggish retail sales without festivities to drive consumer spending.

Maybank said there is no change to its earnings estimates. 1H24 core net profit made up 59% of estimates AEON's 2Q24 core net profit of MYR28m (-10% YoY, -52% QoQ) brought 1H24 core net profit to MYR85m (+20% YoY). The latter represented 59% of both and consensus full-year earnings estimates. The outperformance in PMS' segmental EBIT margins attributed to the earnings beat.

Robust PMS sales cushioned weak retail spending
2Q24 revenue eased -1% YoY on the back of softer retail sales (-3% YoY) from timing differences of the Hari Raya festive season, but was partially mitigated by stronger PMS sales (+9% YoY) from higher occupancy and rental renewal rates. Group EBIT fell by a wider 8% YoY on significantly weaker retail contribution (-98% YoY) and higher unallocated expenses
(+106% YoY). PMS segment EBIT however increased by 16% YoY (PMS EBIT margin: +2.0ppts YoY) in conjunction with occupancy rate improvements.

Expecting PMS to be key earnings growth driver
Resilient PMS segment earnings are expected to continue into 2H24. Leveraging on AEON's 40th Anniversary in Malaysia, the group has prepared various marketing activities to ensure shopping mall footfall stays high, which in turn, safeguards AEON from unexpected declines in occupancy rates. The progressive completion of certain mall rejuvenation/facelifts
exercises will also drive topline growth for PMS in FY24. AEON's retail segment may experience a lull in sequential quarters in the absence offestivities before seeing an uptick towards the year-end and school holiday period. Maybank said it is keeping its earnings estimates unchanged pending AEON's 2Q24 results briefing today.