KUALA LUMPUR (Nov 22): AEON Co (M) Bhd (KL:AEON) is expected to deliver stronger earnings in the last quarter of the year as it is anticipated to see higher sales efficiency during the year-end festive season, according to TA Securities in a note on Friday.
AEON's fourth-quarter earnings would be backed by strong demand during the upcoming year-end festive season and higher tenant sales, driven by increased foot traffic at AEON Co malls, the research house said.
It projected the general merchandise store and supermarket chain operator's 4QFY2024 revenue growing by 23.2% quarter-on-quarter to RM1.2 billion (4QFY2023: RM1 billion).
"We anticipate the group’s occupancy rate to improve to 95% (2% points year-on-year) in FY2024, driven by ongoing mall rejuvenation projects and store upgrades designed to attract more shoppers,” TA Securities said.
The property management segment is expected to remain a key earnings contributor, driven by increased footfall, higher tenant sales and effective rental renewals, the research house added.
AEON's core earnings of RM103.5 million for 9MFY2024 came in at about 68% of consensus’ forecast and 62% of TA Securities’ full-year estimate. This was attributed to improved operating profit from both Aeon’s retail and property management segments.
Shares in the AEON remained steady on Friday and have risen over 34% so far this year, reflecting investor optimism on its strategic initiatives — including digital transformation, private brand expansion and mall refurbishments — that help to deliver encouraging results.
Most analysts remained bullish on AEON, with eight recommending “buy” calls and only one issuing a “sell” call. The consensus 12-month target price is RM1.72, offering a potential upside of 17% from its last traded price of RM1.47, Bloomberg data showed.
On its part, AEON, in a statement following its result announcement on Thursday, reaffirmed its commitment to advancing strategic priorities in retail and property management, including accelerating its digital initiatives, expanding its private brand offerings and strengthening AEON Living Zones to meet the evolving needs of its customers.
AEON's net profit for 3QFY2024 rose 35.4% to RM18.79 million from RM13.88 million a year earlier on higher revenue that rose 4.9% to RM1 billion from RM955.9 million a year earlier, driven by growth across all business segments. No dividend was declared for the quarter.
Excluding one-off gains from the lease de-recognition of Kota Bharu land and other exceptional items, the group’s core net profit surged 2.8 times to RM18.7 million, buoyed by stronger revenue across its retail and property management segments.