KUALA LUMPUR: Kenanga Research upgraded Aeon Co
(M) Bhd to outperform with a raised target price of RM2.60 from RM2 previously based on a revised 26.5x FY19E eranings per share.
It said it continues to like AEON following the release of its 1Q18 financial results that showed core net profit of RM27.9mil came in within expectations at 23%/24% of Kenanga's full-year estimates.
"The stock has risen by 64% since our upgrade to outperform and we continue to like AEON, especially for its dual income stream leading to a better position under the zero-rated GST, and strong brand name with 27 malls in operations all over Malaysia," it said.
The research house said AEON's 1Q18 revenue increased 4% from a stronger performance in both the retailing and property management divisions due to better contribution from the opening a new shopping mall in Kempas, Johor, and shopping malls there were renovated and expanded last year.
Kenanga noted that with the zero-rated GST starting on June 1, AEON may lower its selling prices for all its brands.
It added that the group has opened one new AEON mall in Kuching in 2Q18 and plans to open one AEON mall in Negeri Sembilan in 1Q19.
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