KUALA LUMPUR: Analysts predict a strong fourth quarter for Aeon Co M Bhd driven by the year-end festive season and early Lunar New Year, after nine-month earnings came in largely within expectations.
Aeon's 9M24 core profit of RM104 million marked a 26.5 per cent year-on-year (YoY) increase, supported by a 3.1 per cent rise in sales to RM3.2 billion.
Analysts attributed this growth to improved occupancy rates, effective rental renewals, and higher consumer spending, likely aided by government initiatives such as flexible withdrawals under the Employees Provident Fund (EPF) restructuring.
RHB Research, HLIB Research, and CIMB Securities forecast a strong 4Q24 performance, driven by the year-end festive season, school holidays, and the earlier Lunar New Year celebrations in February.
The property management segment (PMS) is widely seen as Aeon's key growth driver, benefiting from above-industry rental reversions and ongoing mall refurbishments.
RHB and HLIB noted that Aeon's tenant mix optimisation and efforts to attract popular brands should further enhance foot traffic and tenant sales, boosting PMS revenue.
"While sales were relatively flat QoQ, YoY growth of +5 per cent was driven by higher customer spending in retail and improved occupancy rates and rental renewals in PMS," HLIB noted.
Additionally, Aeon's mall expansions, including the highly anticipated Aeon Mall KL Midtown, are expected to contribute to its growth trajectory.
CIMB highlighted a slightly weaker-than-expected 3Q24 performance, primarily due to lower PMS margins, but expects a rebound in the final quarter and the firm remains confident in AEON's ability to deliver robust earnings over the long term, supported by rejuvenated malls, new store openings, and its strong positioning in the retail space.
"We expect Aeon to stage a strong QoQ rebound in 4Q24F (historically the strongest quarter,with its core EPS representing 35 per cent to 39 per cent of the full-year core EPS in FY22–23)," it said in a note.
CIMB raised its target price for the stock to RM1.75 while RHB maintained its share price target, reflecting a 20 per cent upside from current levels of RM1.46.
Meanwhile, HLIB said it is confident with its sales trajectory and reckon that Aeon's strategy would enable them to further benefit from recent government initiatives such as the EPF Account 3, civil servants pay hike and minimum wage increase.
"The firm has maintained its target price of Aeon at RM1.82.
All three firms have a "Buy" call on Aeon's stock, citing the company's well-positioned strategy for capitalising on upcoming seasonal demand.