PETALING JAYA: The move by 99 Speed Mart Retail Holdings Bhd
to venture into China was well-received by the market as the stock moved north by 1.6% yesterday.
Despite the tough Chinese retail landscape, 99 Speed Mart’s diversification into the world’s second largest economy is seen as timely.
CIMB Research said it is positive on this development as it marks the group’s first step abroad, diversifying beyond Malaysia and alleviating long-term saturation risks.
“While execution risks exist in China’s competitive retail landscape, 99 Speed Mart’s strong net cash balance of RM836mil as at end of the second quarter of 2025 (2Q25) provides financial flexibility without overstretching its balance sheet,” the research house added.
In a filing with Bursa Malaysia on Tuesday, the mini market retail chain operator confirmed the opening of its first overseas outlet under the “99 Mini-Mart” brand in Fuzhou, Fujian Province, China, on Aug 31.
“The company will also set up prototype outlets with plans to progressively expand within Fuzhou.
“The establishment of the store is not expected to have a material impact on the group’s earnings or net assets for the financial year ending Dec 31, 2025,” according to 99 Speed Mart.
The move comes as no surprise, as the company had earlier highlighted potential plans for overseas expansion as part of its initial public offering strategy (2024) and reiterated this vision in its 2Q25 and first half 2025 results announcement.
Prior to this move, the group had already established a procurement presence in China via Yiwu Speed Mart Import & Export and Yiwu J-Jade Trading (since 2023), enhancing sourcing efficiency and scale for household product categories in Malaysia.
“We view the Fuzhou store as a pilot project, with minimal near-term financial impact.
“While 99 Speed Mart has highlighted plans to continue setting up prototype outlets and progressively expand within Fuzhou, we expect store openings in China to remain gradual (likely fewer than 40 outlets over two years; 1.3% of its total current store count), with initial startup losses having limited downside risk.
“This compares with the group having 2,980 outlets across Malaysia at end-2Q25. Note that we have yet to incorporate potential earnings impact from its China venture into our forecasts,” the research house noted.
Pending further updates on this development, the research firm said it is maintaining its FY25 to FY27 earnings per share forecasts, “buy” rating, and target price of RM2.80 per share.
