AEON Co. (M) Berhad (AEON) is set to benefit from early improvements in consumer spending, bolstered by increased disposable income from EPF Account 3 withdrawals. Despite anticipated seasonal softness in retail sales for 2Q24, AEON's efforts in in-store promotions and its ongoing rejuvenation and expansion plans are likely to drive medium-term earnings growth. The company's retail and property management services (PMS) segments are expected to perform resiliently, with AEON maintaining its growth trajectory through strategic renovations and enhanced store offerings.

Maybank Investment Bank (Maybank) maintains its BUY call on AEON, setting a target price of MYR1.74. The bank highlights AEON's attractive valuation, trading at 13x FY24E Price-to-Earnings Ratio (PER), which is below its five-year mean of 17x. The report underscores AEON's stable earnings outlook, with modest projected growth of 4.8% YoY for FY24, supported by its robust mall occupancy rates and strategic store expansions.

AEON's planned store and mall facelifts are on schedule, with renovations at AEON IOI Puchong expected to be completed by the end of August 2024, and further upgrades at AEON Bukit Indah and AEON Tebrau City set to be finished by 4Q24. The company's solar panel installations across 14 malls are anticipated to reduce electricity consumption, enhancing overall cost-efficiency.

Both Maybank's forecast and valuation reflect AEON's solid positioning to capitalise on favourable consumer trends and effective cost management strategies, making it a promising investment opportunity.