PETALING JAYA: Home-linen retailer Yoong Onn Corp Bhd
is expected to chart steady growth over the next three years, supported by its expanding retail network and growing eCommerce presence.
Yoong Onn is a leading integrated designer, manufacturer, distributor and retailer of home linen and bedding accessories in the region.
The company has over five decades of experience and offers more than 10 main brands of home linen for premium to mid-range consumers.
CIMB Research projects the company will post a three-year compound annual growth rate of 6.4% in core earnings over financial year 2024 (FY24) to FY27, underpinned by stronger contributions from its retail and online segments.
This comes as the Yoong Onn plans to increase its store count by 7.6% to 66 outlets by the end of FY27, from 58 currently.
The retail segment, which includes its proprietary brands such as Home’s Harmony, Niki Cains and Home’s Outlet, is projected to continue driving revenue, with new outlets targeted in high-traffic areas across Peninsular Malaysia.
“We forecast Yoong Onn to add five outlets in FY25, four outlets in FY26, and four outlets in FY27, thus bringing its total store count to 66 by the end of FY27, or 7.6% growth from end-FY24,” the research house said.
Online sales, which contributed 9% to Yoong Onn’s revenue in the first three quarters of FY25, are expected to gain momentum on the back of improved brand visibility and marketing initiatives aimed at younger consumers.
Complementing its direct retail operations, Yoong Onn is reported to have over 280 consignment counters in department stores including Parkson, AEON, Isetan, Sogo, HomePro and Harvey Norman.
Although contributions from this segment have moderated due to the closure of underperforming counters, the move is part of Yoong Onn’s strategy to enhance operational efficiency and focus on higher-margin channels.
Despite cost pressures stemming from higher employee-related expenses and the expanded scope of the sales and service tax, CIMB Research projects Yoong Onn’s pre-tax margin to remain relatively stable at between 19.9% and 20.4% over FY25 and FY27.
The research house also pointed to Yoong Onn’s business model, highlighting its vertically integrated structure that allows for in-house design, manufacturing and multi-channel distribution.
This structure, it added, enhances Yoong Onn’s operational efficiency and provides pricing power, which helps the group navigate margin pressures more effectively.
Looking ahead, the research house said the company’s performance is expected to be supported by macroeconomic tailwinds including population growth, increasing urbanisation and a recovery in Malaysia’s residential property sector.
These structural factors are anticipated to drive demand for home linen products, particularly among first-time homeowners.
Yoong Onn is trading at an undemanding 8.2 times one-year forward price-earnings multiple and remains in a net cash position of RM142mil as of the end of the third quarter FY25, equivalent to 53.5% of its market capitalisation.
The group’s solid balance sheet supports its ability to maintain a 40% dividend payout ratio, translating into a dividend yield of between 5.2% and 5.7% over FY25 to FY27.
CIMB Research has a “buy” call on Yoong Onn with a target price of RM2.50 a share.
