Aeon 1HFY24 core earnings of RM84.8mn came in within our expectations at 50% but exceeded consensus’ estimates at 59%.
1HFY24 core earnings rose 19.8% YoY, while revenue increased by 2.3% YoY to RM2.2bn. The better earnings in 1HFY24 were driven by higher customer spending and effective cost management. As a result, PBT margin rose by 1.2%-pts to YoY 6.4%.
For 2QFY24, revenue dropped marginally by 1.2% YoY to RM1.0bn, due to the timing of the festive season (early Ramadan sales in 2024). Meanwhile, core earnings declined by 13.2% YoY to RM26.9mn, attributable to the weaker top line.
Sequentially, quarterly core net profit dipped by 53.5% QoQ, while revenue decreased by 12.5% QoQ. The weaker QoQ results are largely due to the stronger performance in 1QFY24.
Retail Segment. 2QFY24 EBIT plunged by 94.6% YoY to RM0.2mn, attributed to a 1.2% YoY decline in festive sales to RM836.8mn. Cumulatively, 1HFY24 revenue grew by 0.7% YoY to RM1.8bn, while EBIT rose by 29.4% YoY to RM54.2mn, thanks to higher consumer spending and improved cost management.
Property Management Segment. 1HFY24 EBIT increased by 16.7% YoY to RM147.8mn, in tandem with a revenue growth of 10.9% YoY to RM371.0mn. The improvement was driven by an 8.8% rise in tenant sales following renovations of Aeon malls. Separately, 2QFY24 revenue rose by 8.9% YoY to RM184.1mn, while EBIT climbed by 16.8% YoY to RM79.8mn. The growth in 2QFY24 was due to higher occupancy rates and successful rental renewals.
No dividend was declared for the quarter under review.
Impact
Maintain our earnings estimates at this juncture, pending further insights from an analyst briefing today.
Outlook
In 2HFY24, Aeon will focus on boosting consumer spending by offering a diverse product range and enticing promotional deals. As a result, we maintain a positive outlook for 2HFY24, supported by effective cost optimisation and ongoing reward programs designed to stimulate the topline growth for the group.
Valuation
We have put our BUY call Under Review pending an analyst briefing today while keeping the target price unchanged at RM1.68/share, based on DDM valuation approach (k: 7.1%; g: 3.0%).
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