CIMB Research has maintained its financial year 2025 (FY25) to FY27 earnings forecasts.
PETALING JAYA: Rising costs are expected to weaken 7-Eleven Malaysia Holdings Bhd
’s earnings in the second half of financial year 2025 (2H25).
This will be weighed down by the full impact of the minimum wage hike, a higher effective tax rate and higher start-up costs from accelerated store rollout.
CIMB Research in a note to clients said: “We expect a softer 2H25 core net profit of RM27.4mil, which represents a 22.6% half-year-on-half-year decline but a 29.8% year-on-year (y-o-y) increase.
“7-Eleven Malaysia had indicated that it has not begun paying the 8% sales and service tax on leasing services (or rental) across its stores at this stage, as it is still awaiting confirmation from its landlords.
“Based on preliminary indications, the potential cost impact could be around RM1mil per annum.
“To mitigate this impact, 7-Eleven Malaysia is focusing on enhancing its product sales mix to support margins,” added the research house.
As the group’s store opening updates and cost guidance are broadly in line with its projections, CIMB Research has maintained its financial year 2025 (FY25) to FY27 earnings forecasts with a target price of RM1.63 per share.
The research house has also reiterated a “reduced” call on the stock, despite intensifying competition in Malaysia’s convenience store/mini-market industry, rising cost pressures, and the stock’s lower liquidity compared with other consumer names.
Meanwhile, Maybank Investment Bank Research (Maybank IB), in a report, said there is room for improvement for 7-Eleven Malaysia.
The research house, which maintained a “sell” call on the stock with an unchanged target price of RM1.60, noted that 7-Eleven’s strategy to raise fresh food sales contribution in conjunction with its cafe-format store expansion plans is well underway.
“However, we believe there is a need for product mix improvements, advertising and promotion spending and overall consumer awareness of its food offerings before its topline growth can surpass the rise in store operating expenses in the near-term,” it added.
At 7-Eleven Malaysia’s recent second quarter of financial year 2025 (2Q25) results briefing, the management shared that group revenue grew 7% y-o-y on positive same-store-sales growth of 3.5% y-o-y compared with 3% in 1H25.
This was led by improvements in both average sales per store (up 4% y-o-y) and average basket sizes y-o-y and added contribution from new stores.
In addition, its 7-Café stores have grown to about 25% of its total store count of 2,651 stores as of the end of 2Q25 – consistent with 7-Eleven Malaysia’s focus to convert all its stores to its 7-Café format eventually.
With rising fresh food contribution (about 14% of total sales in 2Q25) being a key driver to the group’s earnings growth prospects going forward, 7-Eleven Malaysia has acknowledged that its product offering has not reached optimal levels yet.
Despite 7-Eleven Malaysia’s efforts to move up its value chain, Maybank IB believes that the mismatch in fresh food uptake against higher store operating costs for its 7-Café format (such as higher food wastage costs) may continue to delay meaningful improvements in group margins until general consumer spending and product awareness improve.
In a filing with Bursa Malaysia last week following its latest financial results, 7-Eleven Malaysia said its focus for the convenience stores segment continues to be on the expansion of its new cafe by 7-Eleven store format across Peninsular Malaysia.
