despite weaker consumption spending. However, retail margins are expected to
remain under pressure with increased discounting activities to spur retail
spending. Given its strong branding and market niche, we see little threat from the
new retail ruling on hypermarkets. We continue to like AEON for the group’s
resilient sales and superior fundamentals.
Sales still growing. The impact of slower consumer spending has yet to be felt as Jan-Feb same-store sales (SSS) still grew, albeit at a low single digit y-o-y, supported by the resilient property management segment. We gather that the sales at its department stores have slowed although tenants’ sales (save for those in the luxury apparelsegment) remained intact. Nonetheless, we expect retail margins to thin on greater price discounting activities to boost store sales while the property management division would be affected by higher depreciation cost, rental expense for the leasing of some malls not owned by AEON, as well as lower sales from tenants.
Maintain BUY. We maintain our FY09 and FY10 earnings forecast at RM123.5m and
RM128.9m respectively. Our target price of RM4.41 is based on 12x FY10 EPS. We
continue to like AEON for its stronger fundamentals and resilient sales.
EPS for 2009 - 35.2
Current price - RM 4.08
PE = (4.08/35.2)*100 = 11.6
Uncle SAM said anything below 4 is a good buy. Me waiting and eyeing.