Aeon’s FY23 core earnings of RM134.4mn (-3.5% YoY) came in above our and consensus expectations at 117% and 114% respectively. The earnings beat was driven by better performance of its property management segment.
The board declared a final single-tier dividend of 4.0sen/share for FY23, consistent with FY22.
YoY, FY23 revenue remained flat at RM4.1bn (-0.3% YoY), attributed to the partially closure of Aeon Ayer Keroh Mall and Cheras Selatan Mall. However, this was offset by the improved performance of its property management segment (QoQ +5.0% & YoY +9.6%). Meanwhile, EBIT and PBT declined 10.4% and 8.3% respectively, dragged by lower sales in the retail segment and surge in operating costs.
QoQ, 4QFY23 revenue increased to RM1.0bn (+8.1% QoQ), driven by a higher occupancy rate, effective rental renewals, and increased sales during year-end and festive seasons. Net profit stood at RM32.6mn (+136.2% QoQ) thanks to revenue growth in both retail and property segment and effective cost management in this quarter.
Retail Segment. FY23 EBIT declined by 69.3% YoY to RM68.9mn while revenue experienced a marginal drop of 2.0% YoY to RM3.5bn. We believe this was mainly due to higher OPEX coupled with sales disruptions during the closure of Aeon Ayer Keroh Mall and Cheras Selatan Mall.
Property Management Segment. The segmental turnover and EBIT rose by 9.6% and 16.9% YoY, respectively, thanks to higher occupancy rate and positive rental reversion rate.
Impact
No changes on our FY24-25 earnings projections and we introduce FY26 earnings forecast of RM180.5mn.
Outlook
2024 outlook will be challenging due to following factors: i) Continuous weakening in domestic currency, which could elevate cost pressures, ii) Uncertainty of subsidy rationalisation and its impact on spending power, and iii) 2% increase in Sales and Services Tax, which would further dampen consumer spendings.
Valuation
Maintain Buy on AEON with unchanged target price of RM1.57/share based on DDM valuation approach (k: 7.1%; g: 3.0%).
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....