PETALING JAYA: Mini-market operator 99 Speed Mart Retail Holdings Bhd
, Malaysia’s largest initial public offering (IPO) of 2024, has made a “commendable finish”, with the company’s core profit after tax (PAT) surging 29% in its financial year 2024 (FY24).
Hong Leong Investment Bank (HLIB) Research said the company met market expectations, as FY24 core PAT reached RM515.1mil.
The research house projected 99 Speed Mart’s core PAT to rise further to RM555.4mil in FY25 and RM611.5mil in FY26.
“The (FY24) growth was driven by the addition of 81 new outlets during the quarter (bringing the total to 2,778) and enhanced performance at its bulk sales e-commerce platform.
“Total sales transactions rose 13% year-to-date, while earnings before interest, taxes, depreciation and amortisation margins increased, contributing to bottom-line growth,” HLIB Research stated in a note.
Throughout 2024, 99 Speed Mart added 252 new stores.
The average basket size decreased by 3.8% to RM21.40, primarily driven by a change in customer behaviour, as customers opted for smaller but more frequent purchases, in line with the convenience the group offers.
In the fourth quarter of FY24 (4Q24), revenue rose 7% year-on-year (y-o-y) to RM2.6bil, while core PAT increased 19% y-o-y to RM127.2mil.
AmInvestment Bank stated that the company’s results were within expectations.
“FY24 core net profit jumped by 28.5% y-o-y to RM533.3mil, which was within expectations at 99% and 102% of our and consensus full-year estimates, respectively.
“The growth was underpinned by continued store expansion and healthy same-store sales growth of 1.4%.”
The research house said 4Q24 core net profit grew by 18.1% y-o-y, driven by the higher number of stores and an upward adjustment to the distribution centre fee for its suppliers, effective 1Q24.
“Meanwhile, core net profit fell by 3.3% quarter-on-quarter, which was mainly dragged by more promotional activities during the quarter.”
Looking ahead, HLIB Research said it remains encouraged by 99 Speed Mart’s strong performance.
“The group remains committed to its expansion strategy, targeting the opening of at least 250 new outlets in 2025, with an immediate goal of reaching the 3,000-outlet milestone.
“A key focus area will be Miri, Sarawak, where the new Miri Distribution Centre (DC) and several outlets are expected to commence operations by March 2025,” the research house said.
Spanning approximately 15,000 sq ft, the Miri DC is designed to support 60 to 80 outlets across Miri and its surrounding areas.
Meanwhile, 99 Speed Mart’s bulk sales eCcommerce platform has received an encouraging response, with sales increasing by RM23.1mil for FY24, demonstrating sustained growth.
“Moving forward, the group plans to expand its reach to customers across the East Coast and other operational regions, while broadening the platform’s product offerings to better meet consumer demand.”
HLIB Research has kept its “buy” call on 99 Speed Mart and retained the target price at RM2.98 per share.
This is based on FY25 price-to-earnings multiple of 45 times.
“We like 99 Speed Mart due to its strong market presence and extensive store network, with competitive pricing that is well-positioned to drive stable and recurring revenue,” it said.
