CGS-CIMB Research expects the group to post compounded annual growth rate (CAGR) of 12.7% in revenue and 13.4% in core net profit over the financial year ended Dec 31, 2021 (FY21) to FY24, driven by an 18.1% CAGR in retail floor space and 10.1% CAGR in online channel revenue.
KUALA LUMPUR: Malaysia’s largest consumer electrical and electronics (E&E) retailer Senheng New Retail Bhd
has near to medium-term strategies to cement its market leadership position in the E&E segment.
CGS-CIMB Research expects the group to post compounded annual growth rate (CAGR) of 12.7% in revenue and 13.4% in core net profit over the financial year ended Dec 31, 2021 (FY21) to FY24, driven by an 18.1% CAGR in retail floor space and 10.1% CAGR in online channel revenue.
“Our forecasts are based on its near to medium-term strategies.
“These include upgrading or expanding its physical stores, growing its exclusive and own-brand product portfolio, better membership stickiness by enhancing PlusOne, and upgrading its physical and digital back-end infrastructure leading to better operational efficiencies,” the research house said in its report.
Besides physical stores, Senheng retailed its products via online retail channels, including its self-operated app and online store, as well as third-party marketplaces such as Shopee and Lazada.
According to CGS-CIMB Research, the differentiating factor between Senheng and its competitors is that the former is able to cater to consumers’ E&E needs through a wide product offering.
“Over the years, Senheng has built a solid standing and strong operating scale, leveraging on its economies of scale and established relationships with brand principals to offer a wide range of consumer E&E products across all key segments including home appliances, digital gadgets and audio-visual equipment,” it added.
As of May last year, the group carried around 10,000 stock keeping units with over 280 brands.
CGS-CIMB Research also pointed out that Senheng’s key advantage is its “seamless retail model” with full integration of its physical, online and back-end operations despite a highly competitive operating environment in the consumer E&E retail space.
The group’s sales are backed by its strong PlusOne loyalty programme that stood around 90% of its FY21 revenue.
CGS-CIMB Research has initiated its coverage on Senheng with an “add” call and a target price of RM1, based on 17.4 times price-to-earnings ratio.
This is a 20% discount to the research house’s consumer discretionary sector’s five-year mean P/E of 21.8 times.
