AEON CO. (M) (AEON | 6599)

Last Price: RM1.49 | Technical Call: BUY

Company Background. Aeon Co. (AEON) is a leading retailer and mall operator in Malaysia with a diverse retail chain that includes department stores, supermarkets, and pharmacies. It offers a variety of products, including daily essentials, household items, apparel, pharmaceuticals, and flat-price merchandise. The group operates in two main segments: retail and property management services, with additional services available through its myAEON2go e-commerce platform. Currently, AEON operates over 178 outlets across Malaysia, including 28 AEON Malls, 35 AEON stores, 7 AEON MaxValu, 64 AEON Wellness, and 44 DAISO outlets.

Prospects. (i) Expand and diversify the customer base by investing in store renovations, tailoring sales areas to community needs, strengthening the member loyalty program, and broadening private brand offerings to meet rising demand for quality and affordability,

(ii) Increase footfall and engagement by implementing mall rejuvenation projects, diversifying the tenant mix to focus on lifestyle and wellness, adopting flexible tenant management, and launching collaborative thematic marketing initiatives, and (iii) Strengthen the myAEON2go platform to enhance the customer experience, expand digital sales, and offer same-day delivery, ensuring a convenient, high-quality online shopping experience that complements in-store service.

Financial Performance. In 1HFY24, AEON posted a higher revenue of RM2.19bil (+2.3% YoY) with a PAT of RM85.2mil (+24.6%

YoY). This performance was mainly supported by increased customer spending, an improved occupancy rate, effective rental renewals, and disciplined cost management.

Valuation. AEON is currently trading at an FY25F P/E of 12.9x, lower than the Bursa Consumer Index's 5-year forward average of

17.4x. In comparison, 99 Speed Mart Retail Holdings, a Malaysia-based mini-market and groceries retailer offering a wide range of household and consumable products, trades at a higher FY25F P/E of 33.7x.

Technical Analysis. AEON's buying interest is back after it broke out of the 2-week bullish flag pattern a few sessions ago. With its

20-day and 50-day EMAs starting to trend higher again, additional upside strength may be present in the near term. A bullish bias may emerge above the RM1.48 level with stop-loss set at RM1.35, below the 14 Oct low. Towards the upside, near-term resistance level is seen at RM1.70, followed by RM1.80.

Entry: RM1.48-1.49

Target: RM1.70, RM1.80

Exit: RM1.35

Source: AmInvest Research - 8 Nov 2024