We met with the management yesterday and came back with the view
that the company’s outlook continues to be positive in the next three years
especially in 2014 despite the weakness in the global economy. In the shorter
term, management reckons that the company’s upcoming 4Q12 earnings should be
better than the previous three quarters and that the SSSG (Same-Store Sales Growth)
for the year will improve to 3% YoY on the back of the likely stronger 4Q12
results. We believe its targets above are achievable boosted by the festive
seasons, year-end sales and schools re-opening in January. Going forward, we
expect the same 3% SSSG for next year only as well due to the more competitive environment
now. We are maintaining our earnings estimates for FY12E (RM223m) and FY13E
(RM252m). Our AEON’s TP is maintained at RM11.30 based on a targeted FY13E PER
of 15.8x (+2SD from its historical 5-year mean). We are also keeping our UNDERPERFORM
rating on the stock due to its rich valuations.
Better SSSG in 4Q12. AEON’s SSSG has grown at 2% YoY so far for
9M12. However, the management views that the SSSG will grow to 3% YoY as they
are expecting a stronger 4Q12 results and since 4Q is typically the best
performing quarter of the year as well. Meanwhile, we believe the targets above
are achievable supported by the festive season, year-end sales and schools
re-opening in January. Going forward, despite the more challenging business
environment, we expect the company to maintain a similar SSSG of 3% for FY13,
supported by its newer outlets (which have better SSSG of 8%-9%) to mitigate
the slower SSSG of the old outlets (that grow less than 1% yearly).
Expansion of shopping
malls. AEON just opened a mall
(447,000 sq ft) in Sri Manjung on 4th Dec with 207,000 sq ft being occupied by AEON
itself. Despite Tesco, Giant, Econsave and Mydin (soon to be there) mushrooming
around that area, none of them is a full shopping mall. AEON’s concept is thus
better as consumers tend to shop under one roof nowadays and hence, this factor
could help to boost AEON’s earnings from FY13 onwards. In FY13, the company
plans to open a shopping mall (457,000 sq ft) in Kulai with 185,000 sq ft to be
occupied by AEON by 2H13. For FY14, AEON is going to open two shopping malls at
Bukit Mertajam and Sungai Petani in 3Q14 and 4Q14 respectively.
Revamp of existing
outlets. Due to new competitors and the need to have a better tenant mix,
AEON has earmarked two shopping malls in
its stable for a revamp exercise. The company has started to revamp its AEON
AU2 shopping mall and this is targeted to be completed in 2H13. The other
shopping mall earmarked is AEON Bukit Raja, which the company plans to
refurbish in FY13. We expect these outlets to contribute positively to the
group’s future earnings after their revamps as proven in past occasions.
Higher CAPEX in
FY14-FY15 for expansions and upgrades. We do not expect much capex spending
for FY13 as there will only be one shopping mall opening next year.
Nevertheless, management guided that there will be a much higher capex towards FY14-15.
Approximately RM400m each year will be spent for the opening of three and two
new shopping malls for FY14 and FY15 respectively. In addition to that, this
includes about RM20m each to revamp the AU2 and Bukit Raja shopping malls. The
group is currently at net cash position with RM342.8m cash as of 3Q12. Thus, we
believe it will have little funding issues to finance the expansion.
Impact of AEON Big.
Recently, Japan’s largest retailer AEON Co Ltd has acquired Carrefour
Malaysia’s operations and changed the name to AEON Big. According to management,
the acquisition will not impact the company’s earnings as AEON Co Ltd would be
bearing the losses at Carrefour. However,
management views this as a positive acquisition to the overall AEON
group umbrella as the company now has less one competitor with a better
bargaining power and an increase in its customer base as well.
Source: Kenanga
No comments:
Post a Comment