RHB Research noted that Eco-Shop is expecting significant improvement in same-store sales growth in 3Q26.
PETALING JAYA: Eco-Shop Marketing Bhd
’s outlook is turning more positive after its latest financial results, analysts say.
Earlier this week, the retailer of affordable household goods said it is expecting stronger sales momentum, widening margins and accelerated store openings after reporting results for the second quarter of its financial year ending May 31 (2Q26).
Eco-Shop’s net profit rose to RM61.9mil for 2Q26 from RM53.6mil, while revenue grew to RM714.8mil from RM694.5mil.
For the first half of its current financial year (1H26), its net profit totalled RM120.6mil, compared with RM93.2mil in 1H25, while revenue increased to RM1.4bil from RM1.36bil.
The performance trajectory suggests the discount retailer is positioned to capitalise on shifting consumer behaviour and operational improvements already taking effect.
RHB Research noted that Eco-Shop is expecting significant improvement in same-store sales growth (SSSG) for 3Q26 driven by a more targeted promotion strategy to increase customer demand, introduce exciting new product, and enhancements to store productivity.
“We believe consumer sentiment may have improved to aid the strong sales momentum. In addition, the supply chain disruption due to resizing and repackaging had been largely resolved in 2Q26,” the research house wrote in a report.
RHB Research noted that margin dynamics would also likely to be a key earnings lever.
“The company’s elevated gross profit margin could expand further going forward after the discontinuation of the ‘Sama Bantu’ price discount promotion that ran from last July to October. Favourable foreign exchange rates, and rising scale also favour margin expansion,” it stated.
On expansion, RHB Research pointed out that the company’s pipeline of new stores remains robust with 100 stores to be opened in its current financial year (FY26) to seize opportunities ahead of competitors.
“The expansion is planned strategically to avoid cannibalisation, with around 90% of the new stores located more than 15km away from an existing store,” it added.
RHB Research maintained its “buy” call on Eco-Shop, with a higher target price of RM1.85, up from RM1.81 previously.
RHB Research said Eco-Shop’s 1H26 results were in line with its expectations, supported by gross profit margin expansion and new store openings.
“We foresee the industry continuing rapid growth by capitalising on consumer trends, thereby providing a long expansion runway to the group,” it said.
“Other than long-term earnings sustainability, Eco-Shop offers earnings visibility thanks to its necessities-oriented product mix. Such a scarce investment case will continue to support valuation rerating amid a bullish sector sentiment,” it added.
Similarly optimistic, Maybank Investment Bank Research (Maybank IB Research ) reiterated its “buy” call on Eco-Shop, with a higher target price of RM1.80, up from RM1.70 previously.
“We expect earnings performance to be stronger half-on-half on the back of margin accretion from the increase in food-category prices, gradual SSSG recovery, and a ramp up in new store openings,” the research house said.
Maybank IB Research said its new target price for Eco-Shop is a reflection of its raised earnings estimates for the group from FY26 to FY28 by 6% a year, while the valuation remains unchanged at 32 times FY26’s earnings.
It said that Eco-Shop’s 2Q26 SSSG remained weak having dropped 12.3% year-on-year (y-o-y), compared with a drop of 12.7% y-o-y in 1Q26, though this had likely bottomed.
“As of the end of 2Q26, Eco-Shop had a total of 409 stores. Management shared that it is in preparation to open another 61 stores in 2H26, which may bring its total FY26 store openings to 99, surpassing its target of 70 stores a year,” Maybank IB Research said.
Meanwhile, an analyst told StarBiz that the combination of improving same-store sales, easing operational disruptions and disciplined store expansion would suggest that Eco-Shop is entering a more stable earnings phase, with upside skewed towards 2H26.
“What stands out is management’s ability to protect and even grow margins while accelerating store openings, which reinforces Eco-Shop’s positioning as a defensive yet scalable consumer play in the current environment,” he said.
