KUALA LUMPUR (Jan 23): Aeon Co (M) Bhd (KL:AEON) is set to deliver another strong performance in the final quarter of the financial year 2024, with a projected net profit of RM57.3 million, according to CIMB Securities.
The fourth quarter is historically Aeon’s strongest, contributing 35% to 39% of the annual core earnings per share in FY2022 to FY2023, CIMB Securities noted.
The firm expects earnings in the fourth quarter, ending Dec 31, 2024 (4QFY2024), to be further boosted by year-end festivities, higher trade rebates, and civil-servant salary hikes.
Newly reopened stores, including AEON Bandar Puchong, AEON MaxValu Prime Desa Park City, AEON Bukit Indah, AEON Ipoh Station 18, and AEON Mall Tebrau City, may also contribute to increased sales, according to the note released on Thursday.
Looking ahead, CIMB Securities remains optimistic about Aeon’s prospects, forecasting a 9.3% compound annual growth rate (CAGR) in earnings per share from 2023 to 2026.
This outlook is supported by stronger revenue from mall rejuvenation efforts, the upcoming launch of AEON Mall (KL Midtown), and the planned extension of AEON Seremban 2 mall.
One-off damages in legal dispute
Meanwhile, CIMB Securities views Aeon’s payment of RM22.5 million in damages from a legal dispute as a one-off, non-recurring expense.
Aeon said on Wednesday that it had made the payment to Betanaz Properties Sdn Bhd, a 51%-owned subsidiary of Ahmad Zaki Resources Bhd (KL:AZRB), after the High Court granted the company a conditional stay of the judgement in a tenancy agreement dispute.
According to CIMB Securities, Aeon is likely to incur this expense in either 4QFY2024 or 1QFY2025, but it is not expected to have a significant impact on Aeon’s operations or brand.
While the damages represent a negative development, the house highlighted that the court had dismissed an additional RM59.3 million claim from Betanaz Properties.
CIMB Securities maintains its "buy" call on Aeon, with a target price of RM1.75.
The dividend yields are strong, ranging from 3.9% to 4.6% for the forecasted period of FY2024 to FY2026, the house noted, though it flagged downside risks, including weaker consumer spending, and higher promotional or operating costs.
At the time of writing on Thursday, Aeon’s shares were traded two sen or 1.32% lower at RM1.50, valuing it at RM2.11 billion.