PETALING JAYA: Analysts are turning cautious about 7-Eleven Malaysia Holdings Bhd
as they feel the market has not priced in the slowing in earnings growth for the operator of convenience stores.
CGS International Research (CGSI Research) has downgraded 7-Eleven Malaysia to “reduce” with a lower target price for the stock at RM1.40 over concerns about the group’s earnings.
The research house said the convenience store chain’s valuations remained stretched versus its peers’ average of between 14 and 22 times, given its strong share price gains.
“In the convenience-store space, we prefer Mynews Holdings Bhd,” the research house added.
“We raise our selling and distribution costs estimates, as well as depreciation estimates for 7-Eleven and cut our core earnings per share compounded annual growth rate forecast for last year to 2028 to 13.5% from 16.8% previously,” the research house said.
It added that the group’s management has confirmed that it will continue to refurbish 200 classic 7-Eleven stores to the newer 7Café format and open 100 new 7-Eleven stores, which could be of the classic or 7Café format.
“With its revenue-per-store-per-quarter consistently lagging Mynews, we see the group’s efforts to roll out more 7Cafés, which record 50% more sales than classic stores, as a way to close its revenue-per-store gap with its peers,” the research house said.
