Nomura starts coverage of Bison with Buy call

KUALA LUMPUR: Nomura Research has initiated coverage of Bison Consolidated Bhd, a retail convenience store company, with a target price of RM2.25.

It said on Wednesday the RM2.25 target price was based on 27 times FY17F price-to-earnings. 

“We like the retail convenience store (CVS) space in Malaysia, as we think that this sub-sector has more room for growth, mainly due to stores per million people are still 5%-15% which is more than 60% underpenetrated versus regional / global peers.

“Fast-growing average sales per outlet in the CVS space (4% CAGR over FY12-15) as compared to modern grocery retailers (-4% CAGR over FY12-15),” it said.

Nomura Research said while Bison’s management currently guides an expansion of 70 stores per year (accounting for 80% of sales growth), “we think that new stores could potentially be opened faster should quality locations with higher footfall be made available”. 

There are currently two mass rapid transit lines and one light rail transit line planned in Malaysia.