AEON Co (M) Bhd has received positive endorsements from RHB Investment Bank Bhd (RHB Research) and MIDF Amanah Investment Bank Bhd (MIDF Research), with both maintaining BUY calls.
RHB Research set a target price of RM1.75, reflecting a 20% upside and a 4% FY2025 yield, while MIDF Research's target price of RM1.67 signals a 14.4% share price return and a 2.7% dividend yield.
AEON's core profit for the first nine months of FY2024 rose 26.5% year-on-year to RM104 million, in line with analysts' expectations. This achievement, supported by steady growth in its retail and property management segments (PMS), positions AEON to close the year with record earnings.
Analysts expect a stronger fourth quarter, spurred by the festive season, school holidays, and the earlier-than-usual Lunar New Year in February 2024.
The property management segment (PMS) has been a key growth driver, benefitting from higher occupancy rates and effective rental renewals.
These gains are the result of AEON's mall refurbishments and efforts to optimise its tenant mix, which have attracted popular brands and boosted foot traffic. PMS revenue rose 9% year-on-year for the nine-month period, while effective cost controls enhanced profitability.
AEON's retail segment recorded a 4.1% year-on-year sales increase for the same period, aided by improved consumer spending. Flexible withdrawal options under the Employees Provident Fund (EPF) restructuring and civil servant salary hikes further supported sales.
However, seasonal factors in the third quarter led to a 1.8% quarter-on-quarter revenue decline, primarily due to the absence of major festivals and holidays.
Looking ahead, AEON is well-positioned to capitalise on resilient consumer spending and plans to accelerate its mall expansion efforts after taking a cautious approach in recent years. Analysts view its deleveraged balance sheet and lower borrowing costs as advantages in a favourable interest rate environment.
Both RHB Research and MIDF Research retained their earnings forecasts, with RHB's target price based on a 14.5x FY2025 price-to-earnings ratio and MIDF's on a 15.5x multiple pegged to FY2025 EPS of 10.8 sen.
AEON's robust management strategies, including cost optimisation and strategic investments, have ensured resilience amid external challenges such as subdued consumer sentiment and inflationary pressures. Analysts maintain that the company's proactive approach and strong fundamentals will sustain its upward trajectory.
