KUALA LUMPUR (Sept 18): Hong Leong Investment Bank (HLIB) Research said that technically, AEON Co (M) Bhd is grossly oversold with indicators on the mend.

In a technical tracker on Monday, the research house said a successful breakout above the RM1.10 level could signal a potential oversold rebound and spur the price towards the RM1.17-1.20-1.28 region.

“Cut loss at 99 sen,” it said.

HLIB said that looking ahead to the second half of 2023 (2H2023), AEON is poised for an earnings rebound in the fourth quarter of 2023 (4Q2023), with the property management services (PMS) segment expected to serve as the primary anchor for the company's earnings base.

“Management has set an occupancy rate target of 93% by end-FY2023 (from 1H2023’s 91.6%), contributed by expansion in cinema fleet and speciality stores coupled with resumption of business for the reopening of AEON Ayer Keroh and AEON Cheras Selatan.

“Note that the PMS segment has consistently formed the bulk of AEON's operating profit, averaging around 78% over the past three years,” it said.  

HLIB said that additionally, the retailing segment is anticipated to rebound with strong sales in 4Q2023, driven by festive and year-end sales.

“Notably, 4Q has traditionally been AEON's seasonally strong quarter, accounting for 35% of full-year earnings,” it said.