CIMB Research anticipates a slight improvement in 7-Eleven’s core net profit in 4Q25 on a quarter-on-quarter basis.
PETALING JAYA: With 7-Eleven Malaysia Holdings Bhd
’s nine-month earnings falling below expectations, analysts have slashed their three-year forecasts and retained their “sell” call on the operator of Malaysia’s largest convenience store chain.
Target prices for the company, which is struggling with rising costs and competition, were also cut to some 20% to 30% below the current share price of RM2.
Maybank Investment Bank Research (Maybank IB) has lowered its target price to RM1.40 per share, while CIMB Research reduced it to RM1.58.
In a note to clients, Maybank IB said 7-Eleven’s net profit of RM33mil for the first nine months of this year (9M25) reflected just 54% of consensus full-year earnings forecasts.
The net profit fell by 26% year-on-year (y-o-y), following higher-than-expected selling and distribution expenses.
However, Maybank IB said the company’s 9M25 revenue of RM2.4bil, which rose 8% y-o-y, was in line with its estimates.
As for the third quarter (3Q25), the research house said that contributions from new stores and higher average sales per store lifted group revenue by 7% y-o-y.
Gross profit margins, however, contracted by one percentage point y-o-y, which the research house suspects could be due to weaker fresh food sales.
As of end-September, 7-Eleven had 2,678 stores, which includes 748 7-Café stores.
“Although we expect 4Q25 earnings to improve from a festive-led boost in sales, operational challenges persist as cost pressures from higher wages and utilities negate its efforts to diversify group revenue mix towards the higher-margin fresh-food category.
“7-Eleven’s diversification into higher-margin fresh-food sales needs to accelerate for meaningful group earnings growth to materialise, going forward.
“Our earnings estimates for this year to 2027 are reduced by between 16% and 27%,” stated Maybank IB.
Meanwhile, CIMB Research also anticipates a slight improvement in 7-Eleven’s core net profit in 4Q25 on a quarter-on-quarter basis.
Nevertheless, this could be partly offset by cost escalation from accelerated store expansion.
“7-Eleven aims to add 100 new stores net this year, having delivered approximately 70 openings in 9M25, and we expect the rollout pace to pick up in 4Q25.”
For its core net profit calculation, CIMB Research excluded property, plant, and equipment (PPE) write-offs of RM1.6mil and a loss on disposal of PPE amounting to RM500,000.
CIMB Research cut its earnings forecasts for this year through to 2027 by between 6.9% and 7.3%, while retaining its “reduce” call on the stock.
“7-Eleven’s valuation remains rich at 36.1 times next year’s price-earnings ratio (0.75 standard deviation above its 10-year mean), amid intensifying industry competition, rising operating cost pressures, and low stock liquidity,” it said.
