KUALA LUMPUR (May 20): Eco-Shop Marketing Bhd (KL:ECOSHOP), set to be listed on the Main Market this Friday, reported a 45% increase in its net profit to RM61.72 million for the third quarter ended Feb 28, 2025 (3QFY2025), up from RM42.57 million a year ago.

Quarterly revenue rose 17.2% to RM736.35 million, compared to RM628.41 million in the previous year, driven by more store openings. In 3QFY2025, Eco-Shop opened 26 new stores, significantly outpacing the 14 new openings logged in 3QFY2024, bringing its total store count to 349.

 Eco-Shop reported a modest same-store sales growth (SSSG) of 0.6% for the quarter, according to its bourse filing.

Meanwhile, its gross profit rose 26% to RM206.15 million in 3QFY2025 from RM163.66 million last year, driven by higher revenue and an improved gross profit margin of 28%, up from 26% a year ago. The increase was attributed to a more favourable product mix and the strengthening of the Malaysian ringgit against the Chinese yuan.

Total operating expenses rose 16.1% to RM131.13 million in the third quarter, up from RM112.95 million a year ago, in line with the group’s expanded operations. Nevertheless, operational efficiency helped improve operating expenses as a percentage of total revenue, which edged down 0.2% to 17.8% in 3QFY2025 from 18% a year earlier.

For the nine months ended Feb 28, 2025 (9MFY2025), Eco-Shop’s net profit increased 35.9% to RM154.91 million from RM114.02 million, while revenue rose 19% to RM2.098 billion from RM1.763 billion in 9MFY2024.

Eco-Shop remains confident in its growth prospects and is committed to expanding its store network, focusing on suburban and rural areas. The company aims to open 70 new stores annually over the next five years.

Citing independent market research, Eco-Shop highlighted that Malaysia’s dollar store sector remains underpenetrated compared to mature markets like Japan, Canada and the US. With the sector projected to grow at a compounded annual rate of 14.2% from 2024 to 2029, the company sees substantial opportunities to capitalise on this expansion.

It also said it remains vigilant and well-prepared to navigate various cost and risk factors, including the electricity tariff hike set for July 1, 2025, along with increased hiring costs from the multi-tier levy system and the mandatory Employees’ Provident Fund Board contribution.

The group remains optimistic about its growth prospects, as it expects higher transaction counts and increased spending following the recent minimum wage hike.

Eco-Shop will have a market capitalisation of RM6.49 billion upon listing — Malaysia’s largest in nine months. At RM1.13, the IPO price values Eco-Shop at 36 times trailing price-earnings ratio (PER) based on its latest full-year net profit of RM177.28 million for the 12 months ended May 31, 2024 (FY2024).

The IPO is expected to raise RM392.11 million, with RM200 million (51%) earmarked for expansion of its distribution centres, RM100 million (25.5%) for bank loan repayments, RM56.27 million (14.4%) for retail network expansion, RM8.52 million (2.2%) for IT investments, and RM27.32 million (7%) for listing expenses.