KUALA LUMPUR: HLIB Research has issued a hold call on Aeon Co (M) Bhd with a target price of RM2.16 per piece, as the research firm views favourably the retailer's ability to capitalise on Malaysia’s growing middle class population.
The firm wrote in its company insight report today that despite challenging times – and competition from trendy retailers like Uniqlo, Topshop and Zara – Aeon managed to increase revenue from its retail segment by 5 per cent in FY2016.
"This was attributed to the opening of new outlets (two new supermarkets, nine new pharmacies, and three new Daiso flat price shops in FY16)," HLIB Research said.
Currently, Aeon operates 33 supermarkets, three Max Values, 48 Wellness (pharmacy), and 39 Daiso stores.
The research house also views Aeon's ability to register high occupancy across its shopping mall very favourably.
Occupancy is above 90 per cent across its 26 shopping malls, with Aeon Shah Alam and Aeon Kota Baru being standouts, with occupancy rates of more than 93 per cent.
"Aeon will continue its long-term plan of opening stores in Malaysia (albeit at a slower pace of one shopping mall a year instead of two) to capitalise on the growing urban, middle class population in Malaysia.
"The group is scheduled to open Aeon Mall Kempas, Johor Baru, by the third quarter of this year and its first mall in Kuching by the first quarter of 2018," HLIB Research wrote.